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    BSET
    Earnings call· May 2026(Q2 FY26)

    BASSETT FURNITURE INDUSTRIES Q2 FY26 earnings call BSET

    Jul 2, 2026 Source

    Executive summary

    Bassett Furniture Q2 FY26 — Strong Retail Written Sales and Margin Improvement Initiatives

    Bassett Furniture reported a mixed second quarter, with strong retail written sales and web growth indicating improving consumer engagement, though consolidated revenue saw a slight decline. The company is actively pursuing strategic initiatives, including marketing optimization, new store openings, and e-commerce enhancements, alongside a commitment to significant SG&A reductions and retail margin improvements to drive future profitability.

    Highlights

    4

    • Retail written sales increased by 9.5% in Q2 FY26, with Memorial Day sales up 14% on 4% more traffic.

    • Consolidated gross margins grew by 90 basis points, primarily driven by improved wholesale margins.

    • Written web sales surged by 40%, marking the 7th of the last 8 quarters with increases exceeding 20%.

    • Generated $7.4 million of cash from operations during the quarter, increasing cash and short-term investments by $2.9 million.

    Concerns

    4

    • Consolidated revenue decreased by $500,000 or 0.7% YoY.

    • SG&A remained stubbornly high, increasing 60 basis points as a percentage of sales, partially due to unforeseen fuel surcharges.

    • Retail gross margins fell by 120 basis points due to aggressive clearance pricing.

    • Wholesale shipments were down 2% despite orders being up 5.2%.

    Guidance & targets

    5
    CategoryTargetConfidence
    Annual SG&A Expense Reduction
    $1.5 million to $2 million
    medium materiality
    High
    Retail Gross Margin Increase
    200 to 250 basis points
    medium materiality
    High
    Total Capital Expenditures
    $10 million and $12 million
    medium materiality
    High
    New Store Opening
    Orlando store opening
    low materiality
    High
    New Store Opening
    Melville, New York store opening
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Wholesale Operations
    Net sales decreased due to less shipments to the open market, partially offset by increases in Lane Venture shipments and shipments to the retail store network. Gross margins improved primarily due to efficiencies in domestic upholstery and wood operations, coupled with improved pricing strategies in import wood offerings.
    Shipments to open market: -5.5%Lane Venture shipments to wholesale customers: +1%Shipments to retail store network: +0.8%Total Lane Venture brand shipments: +18%
    		$53.1 million-2%—increased 110 basis points
    Retail Store Operations
    Net sales increased over the prior year. Gross margin declined by 120 basis points primarily due to lower margins on in-line goods (full effect of mid-January price increase not realized) and more aggressive pricing of clearance inventory.
    Written sales: +9.5%
    		$55.5 million+$1.3 million—51.2%

    Operational metrics

    32
    Consolidated Revenue Decrease
    $500,000-0.7%
    Q2 FY26

    Total consolidated revenue was $83.8 million, a decrease of $500,000 or 0.7% compared to Q2 FY25.

    Consolidated Gross Margin Increase
    90increase
    Q2 FY26

    Consolidated gross margins grew by 90 basis points, primarily due to improvements in wholesale margins on slightly lower revenue.

    SG&A as % of Sales (Excluding Preopening Costs)
    53.3%60 basis points higher
    Q2 FY26

    SG&A remained stubbornly high, partially due to higher percentage of corporate retail sales and unforeseen fuel surcharges.

    SG&A as % of Sales (Adjusted for Insurance Proceeds)
    20decreased
    Q2 FY26

    Excluding $700,000 of business interruption insurance proceeds recorded in Q2 FY25, SG&A as a percentage of sales actually decreased 20 basis points.

    Operating Income Margin
    2.7%vs 3% prior period
    Q2 FY26

    Operating income was $2.2 million or 2.7% of sales, compared to $2.5 million or 3% of sales in the prior period.

    Retail Written Sales Growth
    9.5%increase
    Q2 FY26

    Positive traffic during April and May contributed to retail written sales being up 9.5%.

    Memorial Day Written Sales Growth
    14%increase
    Memorial Day

    Memorial Day promotion was especially strong with written sales up 14%.

    Memorial Day Traffic Growth
    4%more traffic
    Memorial Day

    Memorial Day promotion saw 4% more traffic than last year.

    Wholesale Orders Growth
    5.2%up
    Q2 FY26

    Wholesale orders were up 5.2% for the second quarter.

    Wholesale Shipments Growth
    -2%down
    Q2 FY26

    Wholesale shipments were down 2% as the increase in written sales were back-end loaded.

    Cash and Short-Term Investments Increase
    $2.9 millionincrease
    Q2 FY26

    Increased cash and short-term investments by $2.9 million during the quarter after taking into consideration normal cash outflows.

    Retail Gross Margin Decline
    -120fell
    Q2 FY26

    Retail gross margins fell by 120 basis points in the quarter, partially due to more aggressive pricing of clearance inventory.

    Web Traffic Growth
    3%up
    Q2 FY26

    Web traffic was up more than 3% in the quarter.

    Written Web Sales Growth
    40%up
    Q2 FY26

    Written web sales were up by 40%, marking 7 of the last 8 quarters with increases exceeding 20%.

    Average Order Value Increase (Web)
    24%increase
    Q2 FY26

    Contributing to web sales performance was a 24% increase in average order value.

    BDC and BCS Combined Orders Growth
    1.3%rose
    Q2 FY26

    The combined orders for Bassett Design Centers (BDC) and Bassett Custom Studio (BCS) rose by 1.3%.

    BDC Orders Growth
    -6.3%contracted
    Q2 FY26

    Behind the combined numbers, the BDC contracted by 6.3%.

    BCS Orders Growth
    7.2%grew
    Q2 FY26

    The smaller footprint of the Bassett Custom Studio (BCS) grew by 7.2%.

    BDC Account Count
    94
    Q2 FY26

    Currently, we have 94 accounts on the books classified as BDCs.

    BCS Studio Count
    64
    Q2 FY26

    We opened 4 custom studies in the quarter, bringing the fleet total to 64.

    Business Interruption Insurance Proceeds (Q2 FY25)
    $700,000
    Q2 FY25

    Excluding $700,000 of proceeds from business interruption insurance recorded in the second quarter of 2025 as a result of a cyber incident in fiscal 2024, SG&A expenses as a percentage of sales actually decreased 20 basis points as compared to 2025.

    Wholesale SG&A as % of Sales Increase
    90increased
    Q2 FY26

    SG&A expenses as a percentage of sales increased 90 basis points compared with the prior year period, primarily due to increased outbound freight expenses from higher fuel costs.

    Retail SG&A as % of Sales Decrease (Excluding Preopening Costs)
    50decreased
    Q2 FY26

    Total SG&A expenses, excluding new store preopening costs as a percentage of sales decreased 50 basis points from the prior year.

    Business Interruption Insurance Proceeds (Retail, Q2 FY25)
    $569,000
    Q2 FY25

    Excluding $569,000 of proceeds from business interruption insurance recorded in the second quarter of 2025, Retail SG&A expenses as a percentage of sales decreased 150 basis points as compared to 2025.

    Retail SG&A as % of Sales Decrease (Adjusted for Insurance Proceeds)
    150decreased
    Q2 FY26

    This decrease was primarily due to lower health insurance and workers' compensation costs from better claim experience and improved efficiency in the warehouse and delivery operation.

    New Store Preopening Costs
    $473,000
    Q2 FY26

    During the quarter, we incurred $473,000 of new store preopening costs associated with the new stores in the Cincinnati, Ohio market, which opened late in the second quarter, and the Orlando, Florida market expected to open by the end of fiscal 2026.

    New Store Preopening Costs Per Store Range
    $200,000 to $400,000
    Per store

    These costs generally range between $200,000 to $400,000 per store depending on the overall rent cost for the location in the period between the time when we take physical possession of the store space in the time of the store opening.

    Capital Expenditures (Prior Year)
    $4.5 million
    FY25

    Total capital expenditures for 2026 are expected to be considerably more than the $4.5 million spent last year.

    Dividends Paid
    $1.7 million
    Q2 FY26

    We spent $1.7 million on dividends in the quarter.

    Share Buybacks Executed
    $500,000
    Q2 FY26

    We spent $500,000 on share buybacks in the quarter.

    Corporate Store Count
    59
    Q2 FY26

    Currently, we have 59 corporate stores in operation.

    Licensed Store Count
    28
    Q2 FY26

    Currently, we have 28 licensed stores in operation.

    Industry KPIs

    1
    MetricValueDetails
    Tariff refunds dutiessome received

    Product announcements

    2
    ProductTypeDetails
    Opening Price Point Lines (Living Room and Bedroom)launch
    New Product Collaboration with Interior Designerroadmap

    Risks & headwinds

    4
    Stubbornly High SG&AQ2 FY26

    SG&A as a percentage of sales increased 60 basis points YoY (53.3% of sales), despite cost cutting.

    Mitigation: Committed to improving operating margins and reducing expenses by an additional $1.5 million to $2 million on an annual basis.

    Retail Gross Margin DeclineQ2 FY26

    Retail gross margins fell by 120 basis points.

    Mitigation: Plan to raise retail gross margins in mid-July by 200 to 250 basis points.

    Wholesale Shipment LagQ2 FY26

    Wholesale shipments were down 2% despite orders being up 5.2%.

    Mitigation: Attributed to written sales being back-end loaded; implies future shipments will catch up.

    New Store Preopening CostsOngoing for new store openings (e.g., Cincinnati in Q2, Orlando in Q4, Melville in FY27).

    $473,000 incurred in Q2 FY26; generally range between $200,000 to $400,000 per store.

    Mitigation: Considered a necessary front-end loaded investment for future growth, despite impacting current earnings before revenue generation.

    What to watch in Q3 FY26

    5

    Retail Gross Margin Improvement

    Q4 FY26 (full effect)
    CurrentDeclined 120 bps in Q2 FY26
    TargetIncrease by 200-250 bps

    Why it matters

    Crucial for overall profitability improvement, especially given Q2 decline and management's stated plan to raise prices.

    Our retail gross margins fell by 120 basis points in the quarter, partially due to more aggressive pricing of our clearance inventory. Accordingly, we plan to raise retail gross margins in mid-July by 200 to 250 basis points.

    Q&A highlights

    7

    Is the recent sales momentum across all product categories or concentrated in upholstery?

    The momentum is slightly more in upholstery but generally good across all categories.

    “I would say slightly more in upholstery, but pretty good across the board in terms of the increase, but slightly more momentum in the upholstery segment.”

    asked by Anthony Lebiedzinsk · answered by Robert Spilman

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Initiatives for Growth

    Management outlined a four-pronged strategy for growth, focusing on generating higher sales in existing stores, opening new retail locations, investing in omnichannel e-commerce, and expanding the wholesale business. This includes leveraging new marketing analytics and AI to drive traffic and improve customer engagement, aiming to improve operating margins and SG&A percentage.

    02

    Marketing and Customer Engagement

    The company's marketing organization, utilizing a new agency and analytics platform, has improved efficiency, driving positive traffic trends in April and May, and contributing to a 9.5% increase in retail written sales. AI is also being integrated for more personalized customer outreach, building on successful product introductions from 2025 and new opening price point lines.

    03

    Retail Expansion

    Bassett opened a new 14,000 square foot store in Cincinnati in May, marking a return to the market, and plans another similar store in Orlando in early October. Additionally, an existing dealer in Nashville converted to a Bassett Home Furnishing store. The company currently operates 59 corporate and 28 licensed stores and continues to evaluate opportunities to convert licensed locations to corporate stores.

    04

    E-commerce Performance

    Web traffic increased by over 3%, and written web sales surged by 40%, marking the seventh consecutive quarter of over 20% growth. This performance was supported by a 24% increase in average order value and improvements to the user experience, including an updated fabric module for customization and a new navigation menu. The national home delivery program launched last fall is also contributing to reach customers in all contiguous 48 states.

    05

    Wholesale Business Development

    Efforts to expand wholesale include optimizing dedicated distribution concepts (Bassett Design Centers and Bassett Custom Studios), increasing focus on the professional interior design channel with a new High Point showroom, and developing the 6-month-old Bassett Hospitality division. The company has written initial orders with various entities in the hospitality segment and is committed to learning and growing in this new business area.

    06

    Product Strategy and Innovation

    Successful product introductions from 2025 in upholstery and case goods have become top 5 items in their categories. At the April High Point market, the company introduced new opening price point lines for living room and bedroom, bolstering its 'good, better, best' strategy. These new collections will be available in stores and independent dealers before the important Labor Day selling events.

    AI-generated summary of the company’s earnings call. Not investment advice.