Bassett Furniture (BSET) Q2 FY26 earnings call: guidance and Q&A

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

What are the core reasons for the positive sales momentum, and how sustainable are these trends?

It's a combination of new personnel, better customer understanding through analytics from a new agency, and integrating AI. Management believes they have momentum and an improving formula.

“Well, I think we've got some new folks in here who have joined us over the last couple of years. That's an important part of the equation. I think we are understanding our customer better. I think the analytics that a new agency is providing with us is making us more efficient in our investment dollars in terms of reaching the consumer.”

asked by Anthony Lebiedzinsk · answered by Robert Spilman

How should investors think about gross margins going forward, considering wholesale improvements, retail declines, and planned price increases?

Wholesale margins are expected to remain stable. Retail margins have opportunity for improvement with a planned 200-250 bps price increase in mid-July, which will impact consolidated gross margin starting in Q4 FY26.

“Well, I think we are at the level we're going to be to a certain extent on the wholesale side. I think the retail side is where we have opportunity, reference that we were going to increase our margins in July. And we think the pricing model that we have in which stand that.”

asked by Anthony Lebiedzinsk · answered by Robert Spilman

Has the company seen or does it expect any IEPA tariff refunds in the coming months?

Some refunds have been received, and more are expected, though the exact magnitude is not yet definitively qualified. The company is working with accountants on how this will flow through.

“We have seen some so far. And we think there will be more to come. We don't know the magnitude of it entirely yet. And then of course, we have to work with our public accountants who figure out how this flows through. But anyway, yes, we do expect to see some of that. And we haven't received definitive qualification on exactly the extent of it.”

asked by Anthony Lebiedzinsk · answered by Robert Spilman

Will consolidated SG&A be lower year-over-year on a go-forward basis, considering the adjusted decrease in Q2?

The mix between retail (higher SG&A) and wholesale will influence the consolidated number. However, the planned $1.5 million to $2 million in cost savings should start impacting SG&A in Q3 and Q4.

“Well, one thing to remember, and Rob pointed this out as the mix could shift with how much is retail versus how much is wholesale, open market wholesale. And that mix, the more that's retail, the higher the SG&A number, just the dollars. However, we should be seeing -- and we pointed that out to $1.5 million to $2 million cost savings that will really start showing its head in the third quarter, in the fourth quarter.”

asked by Douglas Lane · answered by John Daniel

What kind of products are sold via e-commerce, and do online customers also shop in showrooms?

E-commerce historically sold wood products and custom wood, but recent enhancements have driven more upholstery and custom upholstery sales. The web customer is generally a base customer who also shops in stores, indicating a broader ecosystem.

“Well, we historically -- well, way back in the beginning of e-commerce, we were mostly a closeout vehicle, frankly. And then we began to sell more in line. And that was primarily wood products and [indiscernible] custom wood product. But with some of these enhancements and the navigation that I referred to, we have begun to sell more upholstery and more custom upholstery on the website and is something we have historically.”

asked by Douglas Lane · answered by Robert Spilman

Will the new Melville store opening incur new store costs, or will it be offset by the closing of another store?

New store preopening costs will be incurred for Melville due to accounting rules, even if rent isn't paid immediately. These costs hit earnings before revenue is generated, similar to Cincinnati which will still have a drag in Q3.

“Unfortunately, the way that accounting works, even though in most of these cases, we're not actually paying rent. We have to charge the rent when we get the keys to the empty shell. So that's is kind of irritating, frankly. But that's what we have to do.”

asked by Douglas Lane · answered by Robert Spilman