Bassett(BSET) - 2025 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents unaudited condensed consolidated financial statements, showing a significant shift from losses to profits and improved operating cash flow for the quarter and nine months ended August 30, 2025 Condensed Consolidated Statements of Operations This statement details the company's financial performance, showing a significant turnaround from net losses to net income and improved operational profitability for both the quarter and nine months Quarter Ended August 30, 2025 vs. August 31, 2024 (in thousands) | Metric | Aug 30, 2025 | Aug 31, 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Net sales of furniture and accessories | $80,103 | $75,619 | +$4,484 | | Gross profit | $44,994 | $40,093 | +$4,901 | | Income (loss) from operations | $593 | $(6,357) | +$6,950 | | Net income (loss) | $801 | $(4,505) | +$5,306 | | Basic earnings (loss) per share | $0.09 | $(0.52) | +$0.61 | | Diluted earnings (loss) per share | $0.09 | $(0.52) | +$0.61 | | Regular dividends per share | $0.20 | $0.20 | $0 | Nine Months Ended August 30, 2025 vs. August 31, 2024 (in thousands) | Metric | Aug 30, 2025 | Aug 31, 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Net sales of furniture and accessories | $246,613 | $245,583 | +$1,030 | | Gross profit | $138,733 | $131,720 | +$7,013 | | Income (loss) from operations | $5,545 | $(17,176) | +$22,721 | | Net income (loss) | $4,573 | $(12,899) | +$17,472 | | Basic earnings (loss) per share | $0.53 | $(1.48) | +$2.01 | | Diluted earnings (loss) per share | $0.53 | $(1.48) | +$2.01 | | Regular dividends per share | $0.60 | $0.54 | +$0.06 | Condensed Consolidated Statements of Comprehensive Income (Loss) This statement presents the company's comprehensive income (loss), reflecting a significant positive change from a loss to income for both the quarter and nine months Quarter Ended August 30, 2025 vs. August 31, 2024 (in thousands) | Metric | Aug 30, 2025 | Aug 31, 2024 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Net income (loss) | $801 | $(4,505) | +$5,306 | | Other comprehensive loss, net of tax | $(12) | $(16) | +$4 | | Total comprehensive income (loss) | $789 | $(4,521) | +$5,310 | Nine Months Ended August 30, 2025 vs. August 31, 2024 (in thousands) | Metric | Aug 30, 2025 | Aug 31, 2024 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Net income (loss) | $4,573 | $(12,899) | +$17,472 | | Other comprehensive loss, net of tax | $(36) | $(176) | +$140 | | Total comprehensive income (loss) | $4,537 | $(13,075) | +$17,612 | Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's financial position, showing a decrease in total assets and liabilities, and a slight reduction in stockholders' equity Balance Sheet Comparison (August 30, 2025 vs. November 30, 2024, in thousands) | Metric | Aug 30, 2025 | Nov 30, 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Total assets | $324,241 | $341,170 | $(16,929) | | Cash and cash equivalents | $34,413 | $39,551 | $(5,138) | | Inventories | $61,459 | $54,965 | +$6,494 | | Property and equipment, net | $74,665 | $77,047 | $(2,382) | | Right of use assets under operating leases | $80,587 | $93,624 | $(13,037) | | Total liabilities | $158,523 | $173,843 | $(15,320) | | Total stockholders' equity | $165,718 | $167,327 | $(1,609) | Condensed Consolidated Statements of Cash Flows This statement outlines the company's cash movements, indicating a substantial improvement in cash provided by operating activities despite an overall decline in cash and cash equivalents Nine Months Ended August 30, 2025 vs. August 31, 2024 (in thousands) | Metric | Aug 30, 2025 | Aug 31, 2024 | Change | | :------------------------------------------ | :----------- | :----------- | :----- | | Net cash provided by (used in) operating activities | $5,726 | $(2,323) | +$8,049 | | Net cash used in investing activities | $(4,145) | $(5,629) | +$1,484 | | Net cash used in financing activities | $(6,719) | $(6,132) | $(587) | | Change in cash and cash equivalents | $(5,138) | $(14,078) | +$8,940 | | Cash and cash equivalents - end of period | $34,413 | $38,329 | $(3,916) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes supporting the condensed consolidated financial statements, offering further context on accounting policies and specific financial items 1. Basis of Presentation This note clarifies the basis of financial statement presentation, highlighting the difference in operational weeks between the current and prior fiscal nine-month periods - The nine months ended August 30, 2025, included 39 weeks of operations, compared to 40 weeks for the nine months ended August 31, 2024, due to the prior fiscal year being a 53-week year[21] 2. Interim Financial Presentation and Other Information This note details interim financial presentation aspects, including effective tax rates and the anticipated immaterial impact of new tax legislation - The effective tax rate for the three and nine months ended August 30, 2025, was 26.8%, primarily due to state income taxes and permanent differences[24] - The effective tax rate for the three and nine months ended August 31, 2024, was 22.0% and 17.3% respectively, influenced by increases in the valuation allowance on deferred tax assets associated with Noa Home[25] - New tax legislation (One Big Beautiful Bill Act) enacted in July 2025 is not expected to have a material impact on current fiscal year results[26] 3. Financial Instruments and Investments This note describes the company's financial instruments and investments, specifically detailing short-term certificates of deposit and a pledged security for merchant services - Short-term investments in certificates of deposit (CDs) totaled $20,221 thousand at August 30, 2025, with a weighted average yield of approximately 3.8% and a remaining maturity of about five months[32] - A $2,500 thousand CD is pledged as security for merchant services, maturing in October 2025, and exceeds federal deposit insurance limits[33] 4. Accounts Receivable This note provides details on accounts receivable, including gross amounts, allowance for credit losses, and the impact of write-offs on the allowance Accounts Receivable (in thousands) | Metric | August 30, 2025 | November 30, 2024 | | :---------------------- | :-------------- | :---------------- | | Gross accounts receivable | $13,575 | $14,278 | | Allowance for credit losses | $(440) | $(1,097) | | Accounts receivable, net | $13,135 | $13,181 | - The allowance for credit losses decreased significantly from $1,097 thousand at November 30, 2024, to $440 thousand at August 30, 2025, primarily due to $590 thousand in write-offs against the allowance during the nine months[34][35] 5. Inventories This note details the company's inventory composition, including total inventories, LIFO adjustments, and the reserve for excess and obsolete items Inventories (in thousands) | Metric | August 30, 2025 | November 30, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Total inventories on first-in, first-out method | $79,375 | $72,025 | | LIFO adjustment | $(12,096) | $(11,665) | | Reserve for excess and obsolete inventory | $(5,820) | $(5,395) | | Total inventories | $61,459 | $54,965 | - Additions charged to expense for the reserve for excess quantities and obsolete inventory totaled $1,726 thousand for the nine months ended August 30, 2025[38] 6. Goodwill This note presents the carrying amount of goodwill, which remained constant at $7,217 thousand for the wholesale segment across both periods Goodwill by Segment (in thousands) | Segment | Carrying Amount (Aug 30, 2025) | Carrying Amount (Nov 30, 2024) | | :---------- | :----------------------------- | :----------------------------- | | Wholesale | $7,217 | $7,217 | | Retail | $0 | $0 | | Corporate and other | $0 | $0 | | Total goodwill | $7,217 | $7,217 | 7. Intangible Assets This note details intangible assets, distinguishing between those subject to amortization and non-amortizable trade names, along with associated amortization expense Intangible Assets (in thousands) | Metric | August 30, 2025 | November 30, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Intangibles subject to amortization, net | $76 | $120 | | Intangibles not subject to amortization (Trade names) | $6,848 | $6,848 | | Total intangible assets | $6,924 | $6,968 | - Amortization expense for intangible assets was $43 thousand for both the three and nine months ended August 30, 2025 and August 31, 2024[40] 8. Bank Credit Facility This note outlines the company's bank credit facility, detailing available credit, outstanding letters of credit, and compliance with financial covenants - The company has a Credit Facility of up to $25,000 thousand, with $8,182 thousand outstanding under standby letters of credit at August 30, 2025, leaving $16,818 thousand available[42] - The company was not required to test its financial covenants as its used commitment was below the $8,250 thousand threshold, but would have been in full compliance[42][46] 9. Post Employment Benefit Obligations This note details the company's post-employment benefit obligations, including combined pension liability, net periodic pension costs, and total deferred compensation liability Combined Pension Liability (in thousands) | Metric | August 30, 2025 | November 30, 2024 | | :-------------------------- | :-------------- | :---------------- | | Accrued compensation and benefits | $792 | $792 | | Post employment benefit obligations | $6,217 | $6,125 | | Total pension liability | $7,009 | $6,917 | Net Periodic Pension Cost (in thousands) | Period | August 30, 2025 | August 31, 2024 | | :---------------- | :-------------- | :-------------- | | Quarter Ended | $69 | $111 | | Nine Months Ended | $206 | $332 | Total Deferred Compensation Liability (in thousands) | Metric | August 30, 2025 | November 30, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Accrued compensation and benefits | $330 | $330 | | Post employment benefit obligations | $4,870 | $4,757 | | Total deferred compensation liability | $5,200 | $5,087 | 10. Other Gains and Losses This note outlines other significant gains and losses, including a business interruption insurance claim, non-cash asset impairment charges, and a contract abandonment charge - For the nine months ended August 30, 2025, a $698 thousand gain was recognized from a business interruption insurance claim related to a cybersecurity incident in fiscal 2024[51] - During the nine months ended August 31, 2024, the company recognized $5,515 thousand in non-cash asset impairment charges, including $2,887 thousand in retail, $727 thousand in wholesale, and $1,901 thousand for Noa Home (due to cessation of operations)[53][58] - A $1,240 thousand charge was recognized in fiscal 2024 for contract abandonment related to logistical services, which has since been settled[52] 11. Commitments and Contingencies This note details the company's commitments and contingencies, including contingent liabilities from licensee lease guarantees and upcoming real property leases - Contingent liability under licensee lease obligation guarantees was $4,393 thousand at August 30, 2025, down from $5,131 thousand at November 30, 2024, with a remaining term of six years[56] - Two new real property leases are expected to commence by the end of fiscal 2025, with total annual rents averaging $702 thousand for an initial ten-year term[59] 12. Earnings (Loss) Per Share This note presents the basic and diluted earnings (loss) per share for both the quarter and nine months ended August 30, 2025, and August 31, 2024 Earnings (Loss) Per Share | Period | Basic EPS (2025) | Diluted EPS (2025) | Basic EPS (2024) | Diluted EPS (2024) | | :-------------------------- | :--------------- | :----------------- | :--------------- | :----------------- | | Quarter Ended August 30/31 | $0.09 | $0.09 | $(0.52) | $(0.52) | | Nine Months Ended August 30/31 | $0.53 | $0.53 | $(1.48) | $(1.48) | 13. Segment Information This note provides detailed segment information, outlining the company's operational structure and disaggregated sales revenue for its Wholesale and Retail segments - The company operates in two reportable segments: Wholesale (design, manufacture, sourcing, sale, and distribution of furniture) and Retail (Company-owned stores)[64] - The 'Corporate and other' category includes shared corporate costs and previously Noa Home, which was closed and substantially liquidated in fiscal 2024[62] Segment Sales Revenue (Nine Months Ended August 30, 2025 vs. August 31, 2024, in thousands) | Segment | Aug 30, 2025 | Aug 31, 2024 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Wholesale sales to external customers | $87,196 | $90,171 | $(2,975) | | Retail sales of furniture and accessories | $159,417 | $151,478 | +$7,939 | | Corporate and other - Noa Home | $0 | $3,934 | $(3,934) | | Consolidated net sales | $246,613 | $245,583 | +$1,030 | 14. Revenue Recognition This note details the company's revenue recognition policies for wholesale and retail sales, customer deposits, and provides disaggregated revenue by product category - Wholesale revenue is recognized upon shipment of goods, and retail revenue is recognized upon delivery to the customer[66] - Customer deposits, totaling $23,149 thousand at August 30, 2025, are carried as current liabilities and are expected to be recognized as revenue within the next twelve months[66] Disaggregated Revenue (Nine Months Ended August 30, 2025 vs. August 31, 2024, in thousands) | Product Category | Wholesale (2025) | Retail (2025) | Total (2025) | Wholesale (2024) | Retail (2024) | Corporate & Other (2024) | Total (2024) | | :----------------------- | :--------------- | :------------ | :----------- | :--------------- | :------------ | :----------------------- | :----------- | | Bassett Custom Upholstery | $57,555 | $87,641 | $145,196 | $59,169 | $82,690 | $0 | $141,859 | | Bassett Leather | $11,894 | $5,990 | $17,884 | $11,254 | $3,173 | $0 | $14,427 | | Bassett Custom Wood | $9,016 | $22,957 | $31,973 | $10,510 | $24,336 | $0 | $34,846 | | Bassett Casegoods | $8,731 | $21,031 | $29,762 | $9,238 | $19,684 | $0 | $28,922 | | Accessories, mattresses and other | $0 | $21,798 | $21,798 | $0 | $21,595 | $3,934 | $25,529 | | Consolidated Net Sales | $87,196 | $159,417 | $246,613 | $90,171 | $151,478 | $3,934 | $245,583 | 15. Changes to Stockholders' Equity This note details changes in stockholders' equity, including decreases in total equity, retained earnings, and common shares outstanding, primarily due to dividends and share repurchases - Total stockholders' equity decreased by $1,609 thousand to $165,718 thousand at August 30, 2025, from $167,327 thousand at November 30, 2024[13][70] - Retained earnings decreased by $1,264 thousand for the nine months ended August 30, 2025, due to $5,210 thousand in cash dividends and $627 thousand in common stock repurchases, partially offset by $4,573 thousand in net income[70] - Common shares outstanding decreased by 60,528 shares for the nine months ended August 30, 2025, primarily due to repurchases[70] 16. Recent Accounting Pronouncements This note discusses recent accounting pronouncements, including ASU 2023-07 on segment reporting and the early adoption of ASU 2025-05 on credit losses - ASU 2023-07 (Segment Reporting) will be effective for fiscal 2025, leading to significant changes in segment disclosures but no material impact on financial position or results[71] - ASU 2025-05 (Credit Losses for Accounts Receivable) was early adopted in the third quarter of fiscal 2025, with no material impact on financial position or results of operations[74] Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides a detailed analysis of the company's financial performance, condition, liquidity, and capital resources, highlighting improved profitability driven by increased sales and enhanced gross margins Safe-harbor, forward-looking statements This section outlines the inherent risks associated with forward-looking statements, encompassing factors such as raw material costs, consumer demand, and supply chain disruptions - Forward-looking statements are subject to risks including fluctuations in raw material, fuel, labor, and delivery costs; competitive conditions; consumer demand; credit availability; store profitability; asset impairment charges; cybersecurity threats; future tax legislation; and supply chain disruptions[79] Overview This overview introduces Bassett as a leading home furnishings retailer and manufacturer, noting significant e-commerce growth and the closure of Noa Home Inc - Bassett is a 123-year-old leading retailer, manufacturer, and marketer of branded home furnishings, with approximately 60% of wholesale sales from its network of 87 Company-owned and licensee-owned Bassett Home Furnishings stores[81][82] - E-commerce sales increased by over 30% for the nine months ended August 30, 2025, compared to the same period in 2024, following the introduction of a new web platform in late 2023[84] - Noa Home Inc., an e-commerce retailer acquired in 2022, ceased operations and was substantially liquidated by November 30, 2024, due to nearly two years of operating losses[85] Results of Operations – Periods ended August 30, 2025 compared with the periods ended August 31, 2024 This section analyzes the company's consolidated results of operations, detailing net sales, gross profit, and operating income for the quarter and nine months ended August 30, 2025, compared to the prior year Consolidated Results of Operations (in thousands, except percentages) | Metric | Quarter Ended Aug 30, 2025 | Quarter Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Net sales | $80,103 | $75,619 | $4,484 | 5.9% | | Gross profit | $44,994 | $40,093 | $4,901 | 12.2% | | SG&A expenses | $44,401 | $45,210 | $(809) | -1.8% | | Income (loss) from operations | $593 | $(6,357) | $6,950 | N/M | Consolidated Results of Operations (in thousands, except percentages) | Metric | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------- | :--------------- | | Net sales | $246,613 | $245,583 | $1,030 | 0.4% | | Gross profit | $138,733 | $131,720 | $7,013 | 5.3% | | SG&A expenses | $133,188 | $142,141 | $(8,953) | -6.3% | | Income (loss) from operations | $5,545 | $(17,176) | $22,721 | N/M | Analysis of Quarterly Results This analysis highlights a 5.9% increase in total quarterly sales revenue, driven by retail and wholesale growth, alongside significant improvements in gross margins and reduced SG&A expenses - Total sales revenue for the three months ended August 30, 2025, increased by $4,484 thousand (5.9%), driven by a 9.8% increase in retail sales and a 3.1% increase in external wholesale sales, partially offset by a $988 thousand decline from Noa Home's closure[89] - Gross margins increased by 320 basis points, primarily due to wholesale margin improvements, with the prior year period negatively impacted by $609 thousand in unproductive labor costs from a cybersecurity incident[90] - Selling, general and administrative (SG&A) expenses as a percentage of sales decreased by 440 basis points due to cost reductions, ongoing cost containment, and greater leverage from higher sales[91] Analysis of Year-to-Date Results This analysis shows a 0.4% increase in year-to-date sales revenue, or 3.0% normalized for an extra week, with improved gross margins and reduced SG&A expenses - Total sales revenue for the nine months ended August 30, 2025, increased by $1,030 thousand (0.4%); normalized for the additional week in 2024, consolidated sales increased 3.0%, with a 7.9% increase in retail sales partially offset by a 0.8% decrease in external wholesale sales and a $3,934 thousand decline from Noa Home's closure[92] - Gross margins increased by 270 basis points, with the prior year adversely impacted by $1,729 thousand in increased inventory valuation charges and $609 thousand in unproductive labor costs from a cybersecurity incident[93] - SG&A expenses as a percentage of sales decreased by 390 basis points due to cost reductions implemented in the second half of fiscal 2024 and ongoing cost containment activities[94] Segment Information This section provides a detailed breakdown of financial performance by segment, including reconciliation to consolidated income and specific results for Wholesale, Retail, and Corporate & Other Reconciliation of Segment Results to Consolidated Income (Loss) Before Income Taxes This reconciliation details segment-level net sales, gross profit, and income (loss) from operations, aligning them with the consolidated income (loss) before income taxes Quarter Ended August 30, 2025 (in thousands) | Metric | Wholesale | Retail | Corporate & Other | Eliminations | Consolidated | | :-------------------------- | :-------- | :----- | :---------------- | :----------- | :----------- | | Net sales | $50,787 | $51,891 | $0 | $(22,575) | $80,103 | | Gross profit | $17,837 | $27,181 | $0 | $(24) | $44,994 | | Income (loss) from operations | $8,055 | $(333) | $(7,419) | $290 | $593 | Nine Months Ended August 30, 2025 (in thousands) | Metric | Wholesale | Retail | Corporate & Other | Eliminations | Consolidated | | :-------------------------- | :-------- | :----- | :---------------- | :----------- | :----------- | | Net sales | $157,943 | $159,417 | $0 | $(70,747) | $246,613 | | Gross profit | $55,154 | $83,932 | $0 | $(353) | $138,733 | | Income (loss) from operations | $25,030 | $101 | $(20,166) | $580 | $5,545 | Wholesale Segment This section presents the Wholesale segment's financial results, showing increased net sales, gross profit, and operating income, alongside a decrease in backlog Wholesale Segment Results (in thousands, except percentages) | Metric | Quarter Ended Aug 30, 2025 | Quarter Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Net sales | $50,787 | $47,828 | $2,959 | 6.2% | | Gross profit | $17,837 | $14,681 | $3,156 | 21.5% | | Income from operations | $8,055 | $4,440 | $3,615 | 81.4% | Wholesale Segment Results (in thousands, except percentages) | Metric | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------- | :--------------- | | Net sales | $157,943 | $155,138 | $2,805 | 1.8% | | Gross profit | $55,154 | $49,375 | $5,779 | 11.7% | | Income from operations | $25,030 | $16,886 | $8,144 | 48.2% | - Wholesale backlog at August 30, 2025, was $16,596 thousand, down from $21,750 thousand at November 30, 2024, and $18,481 thousand at August 31, 2024[108] Retail – Company-owned Stores Segment This section details the Retail segment's financial performance, showing increased net sales and gross profit, a reduced operating loss, and a decrease in backlog Retail Segment Results (in thousands, except percentages) | Metric | Quarter Ended Aug 30, 2025 | Quarter Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Net sales | $51,891 | $47,256 | $4,635 | 9.8% | | Gross profit | $27,181 | $24,971 | $2,210 | 8.9% | | Loss from operations | $(333) | $(2,840) | $2,507 | -88.3% | Retail Segment Results (in thousands, except percentages) | Metric | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------- | :--------------- | | Net sales | $159,417 | $151,478 | $7,939 | 5.2% | | Gross profit | $83,932 | $80,673 | $3,259 | 4.0% | | Loss from operations | $101 | $(6,674) | $6,775 | -101.5% | - Retail backlog at August 30, 2025, was $32,206 thousand, compared to $37,053 thousand at November 30, 2024, and $33,251 thousand at August 31, 2024[115] Corporate and Other This section reports on the Corporate and Other segment, reflecting zero sales and gross profit due to Noa Home's closure, alongside managed SG&A expenses Corporate and Other Results (in thousands, except percentages) | Metric | Quarter Ended Aug 30, 2025 | Quarter Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Net sales | $0 | $988 | $(988) | -100.0% | | Gross profit | $0 | $484 | $(484) | -100.0% | | SG&A expenses | $7,419 | $7,447 | $(28) | -0.4% | | Net expenses | $(7,419) | $(6,963) | $(456) | 6.5% | Corporate and Other Results (in thousands, except percentages) | Metric | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | Change (Dollars) | Change (Percent) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------- | :--------------- | | Net sales | $0 | $3,934 | $(3,934) | -100.0% | | Gross profit | $0 | $1,695 | $(1,695) | -100.0% | | SG&A expenses | $20,166 | $23,195 | $(3,029) | -13.1% | | Net expenses | $(20,166) | $(21,500) | $1,334 | -6.2% | - Sales and gross profit declined to zero due to the closure and liquidation of Noa Home during fiscal 2024[117] Other Items Affecting Net Income (Loss) This section examines other financial items impacting net income (loss), including interest income, other net income/loss, and income tax considerations Interest Income This note reports a decline in interest income, primarily attributed to lower balances of interest-bearing cash and cash equivalents, and reduced average investment rates Interest Income (in thousands) | Period | August 30, 2025 | August 31, 2024 | Change | | :-------------------------- | :-------------- | :-------------- | :----- | | Quarter Ended | $472 | $692 | $(220) | | Nine Months Ended | $1,552 | $2,075 | $(523) | - The decline in interest income is primarily due to lower balances of interest-bearing cash and cash equivalents, as well as lower average rates earned on investments[118] Other Income (Loss), Net This note details other net income (loss), with changes primarily driven by costs associated with company-owned life insurance Other Income (Loss), Net (in thousands) | Period | August 30, 2025 | August 31, 2024 | | :-------------------------- | :-------------- | :-------------- | | Quarter Ended | $30 | $(109) | | Nine Months Ended | $(851) | $(489) | - The net change was primarily due to changes in the net costs associated with Company-owned life insurance[119] Income Taxes This note discusses income taxes, including the effective tax rate and the expected immaterial impact of the One Big Beautiful Bill Act - The effective tax rate was 26.8% for both the three and nine months ended August 30, 2025, differing from the federal statutory rate of 21% primarily due to state income taxes and permanent differences[121] - The One Big Beautiful Bill Act, enacted in July 2025, is not expected to have a material impact on the company's results of operations or financial condition in the current fiscal year[123] Liquidity and Capital Resources This section analyzes the company's liquidity and capital resources, covering cash flows, debt obligations, real estate investments, and critical accounting policies Cash Flows This note details cash flow activities, highlighting a significant improvement in operating cash flow despite an overall decline in cash position due to investments, dividends, and share repurchases - Cash provided by operating activities for the first nine months of fiscal 2025 was $5,726 thousand, an $8,049 thousand improvement compared to cash used in operations of $2,323 thousand in the prior year[124] - The overall cash position declined by $5,138 thousand during the first nine months of 2025, with $3,737 thousand spent on property and equipment, $5,210 thousand in dividends, and $1,522 thousand in share repurchases[125] - As of August 30, 2025, $18,882 thousand remained available for future purchases under the stock repurchase plan[125] Debt and Other Obligations This note outlines the company's debt and other obligations, including details of its credit facility, present value of lease obligations, and contingent licensee lease guarantees - The company has a $25,000 thousand Credit Facility, with $8,182 thousand outstanding under standby letters of credit and $16,818 thousand available at August 30, 2025[126] - The present value of lease obligations with terms exceeding one year was $93,300 thousand at August 30, 2025[127] - Contingent liability under licensee lease obligation guarantees was $4,393 thousand at August 30, 2025[127] Investment in Retail Real Estate This note details the company's investment in retail real estate, specifying the net book value of its eight owned properties - The company has an investment in eight retail properties with a net book value of $23,680 thousand at August 30, 2025[128] Critical Accounting Policies and Estimates This note confirms no material changes to critical accounting policies and estimates since the prior fiscal year's Annual Report on Form 10-K - There have been no material changes to critical accounting policies and estimates from the information provided in the Annual Report on Form 10-K for the fiscal year ended November 30, 2024[129] Off-Balance Sheet Arrangements This note identifies off-balance sheet arrangements, including standby letters of credit and guaranteed lease obligations of licensee operators - Off-balance sheet arrangements include standby letters of credit and guaranteed lease obligations of licensee operators[130] Contingencies This note addresses contingencies, stating that legal and environmental matters are not expected to materially adversely affect the company's financial position or future results - The company is involved in various legal and environmental matters, but their final resolution is not expected to have a material adverse effect on financial position or future results of operations[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, including immaterial foreign currency risk, commodity price fluctuations for raw materials and fuel, and commercial real estate market risks - Foreign currency risk is not material as substantially all imports purchased outside North America are denominated in U.S. dollars[132] - Exposure to commodity price risk from raw materials (wood, woven fabric, foam products) and diesel fuel prices (managed by fuel surcharges)[134][135] - Exposure to commercial real estate market risk, including potential impairment of retail real estate holdings ($23,680 thousand net book value) and right-of-use assets ($80,532 thousand unamortized balance), and the risk of loss on guaranteed licensee lease obligations ($4,393 thousand)[136] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures, with no material changes to internal control over financial reporting during the most recent fiscal quarter - The Company's disclosure controls and procedures were evaluated as effective by the principal executive officer and principal financial officer[137] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[137] PART II - OTHER INFORMATION Item 1. Legal Proceedings This section reports that there are no legal proceedings to disclose for the current period - No legal proceedings to report[139] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities This section details common stock repurchase activity during the quarter, noting 23,311 shares repurchased and $18,882 thousand remaining for future repurchases Stock Repurchase Activity (Three Months Ended August 30, 2025, in thousands except shares and price) | Period | Total Shares Purchased | Average Price Paid | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :-------------------------- | :--------------------- | :----------------- | :----------------------------------------------------------------------- | :------------------------------------------------------------------------------------ | | June 1, 2025 - July 5, 2025 | 23,000 | $15.59 | 23,000 | $18,887 | | July 6, 2025 - August 2, 2025 | 311 | $16.02 | 311 | $18,882 | | August 3, 2025 - August 30, 2025 | - | $- | - | $18,882 | - As of August 30, 2025, $18,882 thousand remained available for share repurchases under the plan[139] Item 3. Defaults Upon Senior Securities This section confirms that there are no defaults upon senior securities to report for the current period - No defaults upon senior securities[140] Item 5. Other Information This section reports that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter - None of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended August 30, 2025[141] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, the credit agreement, and CEO/CFO certifications - Exhibits include Articles of Incorporation, By-laws, the Eighth Amended and Restated Credit Agreement with Truist Bank, CEO and CFO certifications (pursuant to Sarbanes-Oxley Act), and Inline XBRL interactive data files[142][143][144][145]