Bassett(US:BSET)2025-10-09 14:00Financial Data and Key Metrics Changes - Total consolidated revenue increased by $4.5 million or 5.9% compared to the prior year, with a 7.3% increase when excluding sales from NOAA Home [14] - Gross margin improved by 320 basis points to 56.2%, driven by better wholesale margins, slightly offset by lower retail margins [14] - Operating income was $600,000 or 0.7% of sales, a significant improvement from a loss of $6.4 million in the same quarter last year [15] - Diluted earnings per share were $0.09, compared to a loss of $0.52 in the prior year quarter [15] Business Line Data and Key Metrics Changes - Wholesale net sales increased by $3 million or 6.2%, with a 9.2% increase in shipments to the retail store network [15] - Retail net sales increased by $4.6 million or 9.8%, although gross margin declined by 40 basis points due to lower margins on in-line and clearance goods [17] - Orders from corporate and licensed stores grew by 5.9%, driven by a 9.8% increase in company-owned retail stores [9] Market Data and Key Metrics Changes - Outdoor sales increased by 18%, while written retail sales rose by 2.4% in the quarter [10] - Website traffic declined slightly, but conversion rates improved by 18% due to enhancements in the online shopping experience [12] Company Strategy and Development Direction - The company is focusing on innovation in product lines, aggressive marketing initiatives, and leveraging technology to adapt to the current market challenges [4] - Plans to emphasize the value of the Custom Studio program and expand its locations [12] - The company is committed to maintaining a strong balance sheet while continuing to pay dividends and repurchase shares [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges in the housing market and consumer caution regarding significant investments in home furnishings [5] - The company remains optimistic about the potential for market share gains due to its domestic manufacturing capabilities [43] - Management expressed caution regarding future gross margin improvements, indicating that margins may stabilize in the 55-56% range [28] Other Important Information - The company has reduced its projected annual capital investment range to $5 million to $7 million [18] - The board approved a regular quarterly cash dividend of $0.20 per share, maintaining a strong liquidity position with no outstanding debt [13][17] Q&A Session Summary Question: Did August see the same case with written sales as delivered sales? - Management confirmed that August was the best month for both wholesale and retail orders, with positive momentum continuing into September [24] Question: What is the extent of the pricing increase due to tariffs? - Management indicated that surcharges were levied on products from Vietnam and India, with Vietnam facing a 20% tariff and India a 50% tariff [26] Question: How should future gross margins be viewed? - Management suggested that gross margins are expected to stabilize around the current levels, with slight improvements possible but not dramatic [28] Question: What is the outlook for new product introductions? - Management noted a focus on a more strategic introduction of new products, with positive feedback on recent launches [29] Question: What is the expected net tariff impact on financials this year? - Management stated that quantifying the net tariff impact is challenging due to the complexity of materials and tariffs involved [38] Question: When will free cash flow cover the dividend? - Management expressed confidence that free cash flow will cover the dividend again soon, particularly in the typically strong fourth quarter [44][45]