BASSETT FURNITURE INDUSTRIES INC

Previous wording

Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The prior fiscal year ending November 30, 2024 was a 53-week year, with the additional week being included in the first fiscal quarter. Accordingly, the information presented below includes 26 weeks of operations for the six months ended May 31, 2025 as compared to 27 weeks included in the six months ended June 1, 2024.

Current wording

Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The prior fiscal year ending November 30, 2024 was a 53-week year, with the additional week being included in the first fiscal quarter. Accordingly, the information presented below includes 39 weeks of operations for the nine months ended August 30, 2025 as compared to 40 weeks included in the nine months ended August 31, 2024.

Previous wording

We consider our website to be the front door to our brand experience where customers can research our furniture and accessory offerings and subsequently buy online or engage with an in-store design consultant. We introduced a new web platform late in 2023 that leverages world class features including enhanced customer research capabilities and streamlined navigation. We know that we are driving a significant percentage of the retail foot traffic to our store network and our open market customers through engagement with www.bassettfurniture.com. Although e-commerce sales continue to be small in relation to in-store sales, we are pleased that we have seen a greater than 35% e-commerce sales increase for the six months ended May 31, 2025 as compared to the same period of 2024. We will continue to invest in ongoing improvements to the aesthetics and user experience that we provide on our website.

Current wording

We consider our website to be the front door to our brand experience where customers can research our furniture and accessory offerings and subsequently buy online or engage with an in-store design consultant. We introduced a new web platform late in 2023 that leverages world class features including enhanced customer research capabilities and streamlined navigation. We know that we are driving a significant percentage of the retail foot traffic to our store network and our open market customers through engagement with www.bassettfurniture.com. Although e-commerce sales continue to be small in relation to in-store sales, we are pleased that we have seen a greater than 30% e-commerce sales increase for the nine months ended August 30, 2025 as compared to the same period of 2024. We will continue to invest in ongoing improvements to the aesthetics and user experience that we provide on our website.

Previous wording

We have factories in Newton, North Carolina that manufacture both stationary and motion upholstered furniture for inside the home along with our outdoor furniture offerings. We also have a factory in Martinsville, Virginia that assembles and finishes our custom bedroom and dining offerings. We also own a facility in Haleyville, Alabama where we manufacture aluminum frames for our outdoor furniture.

Current wording

We have factories in Newton, North Carolina that manufacture both stationary and motion upholstered furniture for inside the home along with our outdoor furniture offerings. We have a factory in Martinsville, Virginia that assembles and finishes our custom bedroom and dining offerings. We also own a facility in Haleyville, Alabama where we manufacture aluminum frames for our outdoor furniture.

Previous wording

Consolidated results of operations for the three and six months ended May 31, 2025 and June 1, 2024 are as follows:

Current wording

Consolidated results of operations for the three and nine months ended August 30, 2025 and August 31, 2024 are as follows:

Previous wording

Total sales revenue for the three months ended May 31, 2025 increased $938 or 1.1% over the prior year period. This consisted of a $3,764 or 7.5% increase in retail sales from our Company-owned stores partially offset by a $1,742 or 5.5% decline in sales to external wholesale customers and a $1,084 decline in sales by Noa Home, which was closed during the second half of fiscal 2024.

Current wording

Total sales revenue for the three months ended August 30, 2025 increased $4,484 or 5.9% over the prior year period. This consisted of a $4,635 or 9.8% increase in retail sales from our Company-owned stores and an $837 or 3.1% increase in sales to external wholesale customers, partially offset by a $988 decline in sales by Noa Home, which was closed during the second half of fiscal 2024.

Previous wording

Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the six months ended May 31, 2025 decreased 370 basis points from 2024 primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024.

Current wording

Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the three months ended August 30, 2025 decreased 440 basis points from 2024 primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024, on-going cost containment activities and greater leverage of fixed costs due to higher sales levels.

Previous wording

Total sales revenue for the six months ended May 31, 2025 decreased $3,454 or 2.0% from the prior year period. Normalizing for the additional week in the first half of 2024, consolidated sales increased 1.7% which included a 7.1% increase in retail sales, partially offset by a 2.5% decrease in sales to external wholesale customers and a $2,946 decline due to the closure of Noa Home during the second half of 2024.

Current wording

Total sales revenue for the nine months ended August 30, 2025 increased $1,030 or 0.4% over the prior year period. Normalizing for the additional week in the first nine months of 2024, consolidated sales increased 3.0% which included a 7.9% increase in retail sales, partially offset by a 0.8% decrease in sales to external wholesale customers and a $3,934 decline due to the closure of Noa Home during the second half of 2024.

Previous wording

Gross margins for the six months ended May 31, 2025 increased 240 basis points over the prior year period. Excluding the above-mentioned additional inventory valuation charges in 2024, gross margins would have increased 80 basis points primarily due to improved margins in the wholesale segment.

Current wording

Gross margins for the nine months ended August 30, 2025 increased 270 basis points over the prior year period. Gross margins in the prior year were adversely impacted by increased inventory valuation charges of $1,729 in the wholesale segment, $472 in the retail segment and $500 in the Noa Home operation, as well as $609 of unproductive labor costs incurred during the temporary shutdown resulting from the cybersecurity incident. Excluding the above-mentioned additional inventory valuation charges and unproductive labor costs in 2024, gross margins would have increased 130 basis points primarily due to improved margins in the wholesale segment.

Previous wording

Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the three months ended May 31, 2025 decreased 330 basis points from 2024 primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024.

Current wording

Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the nine months ended August 30, 2025 decreased 390 basis points from 2024 primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024 coupled with on-going cost containment activities.

Previous wording

In addition to the two reportable segments described above, we include our remaining business activities and assets in a reconciling category known as Corporate and other. This category includes the shared costs of corporate functions such as treasury and finance, information technology, accounting, human resources, legal and others, including certain product development and marketing functions benefitting both wholesale and retail operations. In addition to property and equipment and various other assets associated with the shared corporate functions, the identifiable assets of Corporate and other include substantially all of our cash and our investments in CDs. We consider our corporate functions to be other business activities and have aggregated them with any of our operating segments that do not meet the requirements to be reportable segments. As of and for the three and six months ended June 1, 2024, the only such operating segment included in Corporate and other is Noa Home, which was acquired on September 2, 2022, subsequently closed during fiscal 2024 and substantially liquidated as of November 30, 2024. All sales reported in our Corporate and other category during fiscal 2024 were attributable to Noa Home, which generated substantially all of its sales outside of the United States.

Current wording

In addition to the two reportable segments described above, we include our remaining business activities and assets in a reconciling category known as Corporate and other. This category includes the shared costs of corporate functions such as treasury and finance, information technology, accounting, human resources, legal and others, including certain product development and marketing functions benefitting both wholesale and retail operations. In addition to property and equipment and various other assets associated with the shared corporate functions, the identifiable assets of Corporate and other include substantially all of our cash and our investments in CDs. We consider our corporate functions to be other business activities and have aggregated them with any of our operating segments that do not meet the requirements to be reportable segments. As of and for the three and nine months ended August 31, 2024, the only such operating segment included in Corporate and other is Noa Home, which was acquired on September 2, 2022, subsequently closed during fiscal 2024 and substantially liquidated as of November 30, 2024. All sales reported in our Corporate and other category during fiscal 2024 were attributable to Noa Home, which generated substantially all of its sales outside of the United States.

Previous wording

Results for the wholesale segment for the three and six months ended May 31, 2025 and June 1, 2024 are as follows:

Current wording

Results for the wholesale segment for the three and nine months ended August 30, 2025 and August 31, 2024 are as follows:

Previous wording

Net sales for the three months ended May 31, 2025 increased $1,620 or 3.1% over the prior year, consisting of a 12.6% increase in shipments to our retail store network, partially offset by a 2.6% decrease in shipments to the open market, and a 22% decrease in Lane Venture shipments, primarily related to the timing of shipments for a significant customer. Gross margins for the three months ended May 31, 2025 increased 260 basis points over the prior year period. Excluding the $1,729 of additional inventory valuation charges in the prior year period, gross margins would have decreased by 70 basis points primarily due to the prior year including a reduction in the warranty and returns reserve from improved experience in warranty and returns claims and improved administration of those claims. SG&A expenses as a percentage of sales decreased 190 basis points primarily due to lower bad debt costs coupled with the benefit of cost reductions implemented during the second half of fiscal 2024.

Current wording

Net sales for the three months ended August 30, 2025 increased $2,959 or 6.2% over the prior year, consisting of a 9.2% increase in shipments to our retail store network, a 0.8% increase in shipments to the open market, and a 9.6% increase in Lane Venture shipments. Gross margins for the three months ended August 30, 2025 increased 440 basis points over the prior year period. Excluding the $609 of unproductive labor costs incurred during the temporary shutdown resulting from the cybersecurity incident in the prior year period, gross margins would have increased by 310 basis points. This margin increase was driven by improved pricing strategies in both the upholstery and wood operations coupled with greater leverage of fixed costs from higher sales levels. SG&A expenses as a percentage of sales decreased 210 basis points primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024 coupled with greater leverage of fixed costs from higher sales levels.

Previous wording

Net sales for the six months ended May 31, 2025 decreased $154 or 0.1% from the prior year. Normalizing for the additional the additional week in the first half of 2024, net sales increased 1.7%, consisting of a 9.1% increase in shipments to our retail store network, partially offset by a 2.4% decrease in shipments to the open market and a 9.4% decrease in Lane Venture shipments. Gross margins for the six months ended May 31, 2025 increased 250 basis points over the prior year. Excluding the $1,729 of additional inventory valuation charges in the prior year period, gross margins would have increased by 90 basis points due primarily to improved margins in our Bassett Custom Upholstery business from manufacturing efficiency gains, increased margins in our Lane Venture operations due to improved customer mix and improved margins in the Bassett Leather business, partially offset by the prior year including a reduction in the warranty and returns reserve from improved experience in warranty and returns claims and improved administration of those claims. SG&A expenses as a percentage of sales decreased 170 basis points primarily due to lower bad debt costs coupled with the benefit of cost reductions implemented during the second half of fiscal 2024.

Current wording

Net sales for the nine months ended August 30, 2025 increased $2,805 or 1.8% over the prior year. Normalizing for the additional week in the first nine months of 2024, net sales increased 4.4%, consisting of a 9.1% increase in shipments to our retail store network, partially offset by a 1.5% decrease in shipments to the open market and a 3.4% decrease in Lane Venture shipments. Gross margins for the nine months ended August 30, 2025 increased 310 basis points over the prior year. Excluding the $1,729 of increased inventory valuation charges in 2024 and $609 of unproductive labor costs incurred during the temporary shutdown resulting from the cybersecurity incident in 2024, gross margins would have increased by 160 basis points due primarily to improved margins in our Bassett Custom Upholstery business from manufacturing efficiency gains, increased margins in our Lane Venture operations due to improved customer mix and improved margins in the Bassett Leather business, and improved pricing strategies in the remaining wood and upholstery operations, partially offset by the prior year including a reduction in the warranty and returns reserve from improved experience in warranty and returns claims and improved administration of those claims. SG&A expenses as a percentage of sales decreased 180 basis points primarily due to lower bad debt costs coupled with the benefit of cost reductions implemented during the second half of fiscal 2024.

Previous wording

Wholesale backlog at May 31, 2025 was $18,418 as compared to $21,750 at November 30, 2024 and $19,373 at June 1, 2024.

Current wording

Wholesale backlog at August 30, 2025 was $16,596 as compared to $21,750 at November 30, 2024 and $18,481 at August 31, 2024.

Previous wording

Net sales for the three months ended May 31, 2025 increased $3,764 or 7.5% over the prior year period. Written sales (the value of sales orders taken but not delivered) declined 0.8% from the second quarter of 2024. Gross margin for the three months ended May 31, 2025 declined 50 basis points over the prior period. Excluding the $471 of additional inventory valuation charges in the prior year period, gross margins would have decreased by 140 basis points due to lower margins for both in-line and clearance goods as we have become more aggressive in cycling through unproductive inventory. SG&A expenses as a percentage of sales for the three months ended May 31, 2025 decreased 580 basis points primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024 coupled with lower advertising and marketing costs and efficiency gains in our warehouse and delivery operation. In addition, SG&A expense for the three months ended May 31, 2025 was reduced by a $569 gain from the receipt of insurance proceeds for a business interruption claim arising from the previously disclosed cyber incident which occurred during the third quarter of fiscal 2024.

Current wording

Net sales for the three months ended August 30, 2025 increased $4,635 or 9.8% over the prior year period. Written sales (the value of sales orders taken but not delivered) increased 2.4% from the third quarter of 2024. Gross margin for the three months ended August 30, 2025 declined 40 basis points from the prior period due to lower margins for both in-line and clearance goods as we have become more aggressive in cycling through unproductive inventory coupled with increased promotional activity. SG&A expenses as a percentage of sales for the three months ended August 30, 2025 decreased 590 basis points primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024, lower advertising and marketing costs, efficiency gains in our warehouse and delivery operation along with greater leverage of fixed costs due to higher sales levels.

Previous wording

Net sales for the six months ended May 31, 2025 increased $3,304 or 3.2% over the prior year period. Normalizing for the additional week in the first half of 2024, net sales increased by 7.1%. Written sales (the value of sales orders taken but not delivered) declined 1.5% from the second quarter of 2024. Normalizing for the additional week in the first half of 2024, written sales increased 2.3%. Gross margin for the six months ended May 31, 2025 declined 60 basis points over the prior period. Excluding the $471 of additional inventory valuation charges in the prior year period, gross margins would have decreased by 110 basis points due to lower margins for both in-line and clearance goods as we have become more aggressive in cycling through unproductive inventory. SG&A expenses as a percentage of sales for the six months ended May 31, 2025 decreased 470 basis points primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024 coupled with lower advertising and marketing costs and efficiency gains in our warehouse and delivery operation. In addition, SG&A expense for the six months ended May 31, 2025 was reduced by a $569 gain from the receipt of insurance proceeds for a business interruption claim arising from the previously disclosed cyber incident which occurred during the third quarter of fiscal 2024.

Current wording

Net sales for the nine months ended August 30, 2025 increased $7,939 or 5.2% over the prior year period. Normalizing for the additional week in the first nine months of 2024, net sales increased by 7.9%. Written sales (the value of sales orders taken but not delivered) declined 0.2% from the prior year period. Normalizing for the additional week in the first nine months of 2024, written sales increased 2.3%. Gross margin for the nine months ended August 30, 2025 declined 70 basis points over the prior period. Excluding the $471 of additional inventory valuation charges in the prior year period, gross margins would have decreased by 100 basis points due to lower margins for both in-line and clearance goods as we have become more aggressive in cycling through unproductive inventory coupled with increased promotional activity. SG&A expenses as a percentage of sales for the nine months ended August 30, 2025 decreased 510 basis points primarily due to the benefit of cost reductions implemented during the second half of fiscal 2024, lower advertising and marketing costs, efficiency gains in our warehouse and delivery operation along with greater leverage of fixed costs due to higher sales levels.

Previous wording

Retail backlog at May 31, 2025 was $34,091 compared to $37,053 at November 30, 2024 and $31,545 at June 1, 2024.

Current wording

Retail backlog at August 30, 2025 was $32,206 compared to $37,053 at November 30, 2024 and $33,251 at August 31, 2024.

Previous wording

Sales and gross profit declined from the prior year period due to the closure and liquidation of Noa Home during fiscal 2024. The $559 and $2,981 decrease in SG&A expenses for the three and six months ended May 31, 2025, respectively, was primarily due to closure of Noa Home and decreased corporate overhead spending from better expense management, including the benefit of cost reductions implemented during the second half of fiscal 2024, partially offset by increased incentive compensation.

Current wording

Sales and gross profit declined from the prior year period due to the closure and liquidation of Noa Home during fiscal 2024. The $28 and $3,029 decrease in SG&A expenses for the three and nine months ended August 30, 2025, respectively, was primarily due to closure of Noa Home and decreased corporate overhead spending from better expense management, including the benefit of cost reductions implemented during the second half of fiscal 2024, partially offset by increased incentive compensation.

Previous wording

Interest income for the three and six months ended May 31, 2025 was $521 and $1,080, respectively, compared to $627 and $1,383, respectively, for the three and six months ended June 1, 2024. The decline from the prior year period is primarily due to lower balances of interest-bearing cash and cash equivalents, as well as lower average rates earned on our cash and cash equivalents and investments in CDs compared to the preceding year.

Current wording

Interest income for the three and nine months ended August 30, 2025 was $472 and $1,552, respectively, compared to $692 and $2,075, respectively, for the three and nine months ended August 31, 2024. The decline from the prior year period is primarily due to lower balances of interest-bearing cash and cash equivalents, as well as lower average rates earned on our cash and cash equivalents and investments in CDs compared to the preceding year.

Previous wording

Other loss, net, for the three and six months ended May 31, 2025 was $422 and $881, respectively, compared to $276 and $380, respectively, for the three and six months ended June 1, 2024. The net change from the prior year period was primarily due to higher costs associated with Company-owned life insurance.

Current wording

Other income (loss), net, for the three and nine months ended August 30, 2025 was $30 and $(851), respectively, compared to $(109) and $(489), respectively, for the three and nine months ended August 31, 2024. The net change from the prior year quarter and year to date was primarily due to changes in the net costs associated with Company-owned life insurance compared to the prior year periods.

Previous wording

Our effective tax rate was 26.1% and 26.8% for the three and six months ended May 31, 2025, respectively. The effective rates for the three and six months ended May 31, 2025 differ from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences.

Current wording

Our effective tax rate was 26.8% and 26.8% for the three and nine months ended August 30, 2025, respectively. The effective rates for the three and nine months ended August 30, 2025 differ from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences.

Previous wording

Our effective tax rate was 11.2% and 14.5% for the three and six months ended June 1, 2024, respectively. The effective rates for the three and six months ended June 1, 2024 differ from the federal statutory rate of 21% primarily due to increases in the valuation allowance placed on deferred tax assets associated with Noa Home, the effects of state income taxes and various permanent differences.

Current wording

Our effective tax rate was 22.0% and 17.3% for the three and nine months ended August 31, 2024, respectively. The effective rates for the three and nine months ended August 31, 2024 differ from the federal statutory rate of 21% primarily due to increases in the valuation allowance placed on deferred tax assets associated with Noa Home, the effects of state income taxes and various permanent differences.

Previous wording

Cash provided by operating activities for the first half of fiscal 2025 was $6,903 compared to cash used in operations of $1,919 for the first half of fiscal 2024, representing an improvement of $8,822 in cash flows from operations. This increase was primarily the result of improved operating income and changes in working capital due to the timing impact of expenditures as a result of an additional week in the first half of 2024.

Current wording

Cash provided by operating activities for the first nine months of fiscal 2025 was $5,726 compared to cash used in operations of $2,323 for the first nine months of fiscal 2024, representing an improvement of $8,049 in cash flows from operations. This increase was primarily the result of improved operating income and changes in working capital due to the timing impact of expenditures as a result of an additional week in the first nine months of 2024, partially offset by a planned increase in inventory levels.

Previous wording

Our overall cash position declined $118 during the first half of 2025. During the first half of fiscal 2025, we spent $2,275 on purchases of property and equipment. We also paid $3,476 in dividends during the first half of 2025. We repurchased $1,158 of shares under our stock repurchase program during the first half of 2025 compared to repurchases of only $489 in the prior year period. We expect capital expenditures for the full year to range from $7 million to $9 million. As of May 31, 2025, $19,245 remains available for future purchases under our stock repurchase plan. With cash and cash equivalents and short-term investments totaling $59,818 on hand at May 31, 2025, expected future operating cash flows and the availability under our credit line noted below, we believe we have sufficient liquidity to fund operations for the foreseeable future.

Current wording

Our overall cash position declined $5,138 during the first nine months of 2025. During the first nine months of fiscal 2025, we spent $3,737 on purchases of property and equipment. We also paid $5,210 in dividends during the first nine months of 2025. We repurchased $1,522 of shares under our stock repurchase program during the first nine months of 2025 compared to repurchases of $1,127 in the prior year period. We expect capital expenditures for the full year to range from $5 million to $7 million. As of August 30, 2025, $18,882 remains available for future purchases under our stock repurchase plan. With cash and cash equivalents and short-term investments totaling $54,634 on hand at August 30, 2025, expected future operating cash flows and the availability under our credit line noted below, we believe we have sufficient liquidity to fund operations for the foreseeable future.

Previous wording

We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of one of our licensee-owned stores, and we lease land and buildings used in our wholesale manufacturing operations. We also lease certain personal property such as lift trucks, office equipment and local delivery trucks. The present value of our obligations for leases with terms in excess of one year at May 31, 2025 is $98,405 and is included in our accompanying condensed consolidated balance sheet at May 31, 2025. We were contingently liable under licensee lease obligation guarantees in the amount of $4,639 at May 31, 2025. The remaining terms under these lease guarantees extend for six years. See Note 10 to our condensed consolidated financial statements for additional details regarding our lease guarantees.

Current wording

We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of one of our licensee-owned stores, and we lease land and buildings used in our wholesale manufacturing operations. We also lease certain personal property such as lift trucks, office equipment and local delivery trucks. The present value of our obligations for leases with terms in excess of one year at August 30, 2025 is $93,300 and is included in our accompanying condensed consolidated balance sheet at August 30, 2025. We were contingently liable under licensee lease obligation guarantees in the amount of $4,393 at August 30, 2025. The remaining terms under these lease guarantees extend for six years. See Note 11 to our condensed consolidated financial statements for additional details regarding our lease guarantees.

Previous wording

We have a substantial investment in real estate acquired for use as retail locations and occupied by Company-owned retail stores. Such real estate is included in property and equipment, net, in the accompanying condensed consolidated balance sheets and consists of eight properties with an aggregate square footage of 203,465 and a net book value of $23,848 at May 31, 2025.

Current wording

We have a substantial investment in real estate acquired for use as retail locations and occupied by Company-owned retail stores. Such real estate is included in property and equipment, net, in the accompanying condensed consolidated balance sheet and consists of eight properties with an aggregate square footage of 203,465 and a net book value of $23,680 at August 30, 2025.