Bassett Furniture Industries, Incorporated Q1 FY2026 earnings call

• Housing sales slow impacts business, but fourth quarter sales and profits increased. - Restructuring mindset and focus on leaner, smarter business continues. - Bassett's flexible sourcing model helps with tariffs. - Wood business reinvention paying off with over 50% sales increase in quarter. Copenhagen line top seller. Homework line repositioned in home office. U.S.-made hideaway solid dining program good start. Upholstery sales of true custom leather up 19% in quarter. Simplified grading system for better fabrics. Club level motion poised for growth. Z4 sleeper program innovation. Bassett outdoor line absorbed into Lane Venture outdoor collection. Tweaked marketing activities with digital, print, spot TV. E-commerce sales up 14% in quarter, 27% for full year. Will add stores in 2026. Strategies in place for wholesale channels. Bassett Design Centers sales up 5% in quarter. Bassett Custom Studio up 21% in quarter with 57 partners. Pursuing interior design community and launched Bassett Hospitality division.

Total consolidated revenue increased $4.4 million or 5.1%. Excluding sales from NOAA Home, consolidated revenues increased 6.4%. Wholesale sales were up 8.3%. Retail sales increased 7.9%. Gross margin at 56.3% was a 30 basis point decrease compared to prior year. Selling general and administrative expenses were 53.2% of sales, 60 basis points lower than prior year. Operating income was $2.3 million, or 2.6% of sales. Net sales for wholesale business increased $4.4 million, or 8.3% over prior year. Gross margin for wholesale increased 60 basis points. Net sales for retail store operations increased $4.2 million, over 7.9%. Gross margin for retail declined 150 basis points. SG&A expenses as a percent of sales for retail decreased 180 basis points. Wholesale backlog was $19.5 million. Retail backlog was $34.4 million.

• Fiscal 2026 well underway. - Believes tariff situation stabilized and adjusted prices. - Reassess if tariff situation changes. - Industry data points to ongoing housing and mortgage rate challenges, need to control what can be controlled. - Team smaller with headcount reduced. - Plan to open three new stores in 2026 with $8 to $12 million CapEx forecasted. - Continue to pay quarterly dividend and repurchase shares opportunistically.

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. - Industry challenges with housing and mortgage rates. - Tariff situation could change again impacting business. - Disruptions from weather events as seen with store closures.

Q: Can you comment on pricing versus unit volumes?

A: On wholesale side, sales dollars up 8%, price increase not 8%, probably up a tad on unit standpoint.

Q: Comment on written retail sales and demand trends so far in early fiscal 26?

A: Started quarter strong, tempered as quarter went on, had strong Black Friday, first seven weeks solid, last two weeks disrupted by weather, written sales up 4% for quarter.

Q: Expect to open more Bassett Design Studios and Design Centers?

A: Do expect to open more, focus on productivity of concepts.

Q: Long-term thoughts on retail store network?

A: Look at geography, revenue from each area, post-COVID models changed, pace of two to four stores a year foreseen, along with other efforts to grow top line.

Q: Will price increase on Jan 1 be enough to get retail margins up?

A: Margins were impacted this quarter but think they're about where they'll be, could increase slightly.

Q: How do new stores impact P&L on retail side?

A: Impact on SG&A with rent expense recorded before opening and sales not ringing up immediately.

Q: Where is market share taken from?

A: Attributed to new products, improved assortment, and phenomenon of independent retailer generational businesses going away.

Q: Attitude on share repurchase?

A: Still opportunistic, stay the course looking at cash level and generation.