Bassett Furniture Industries, Incorporated (BSET) Q3 2025 Earnings Call Transcript

Consolidated Sales Growth Increased by 5.9% year-over-year, with August being the strongest month for orders. Excluding sales from Noa Home, consolidated revenues increased by 7.3%. The growth was attributed to ongoing operating efficiencies and a recovery from last year's cyber incident.

Operating Income Achieved $600,000 in consolidated operating profit compared to a loss of $6.4 million in the prior year. This improvement was due to better wholesale business performance and recovery from the cyber incident in the previous year.

Gross Margin Improved by 320 basis points year-over-year, driven by better wholesale margins. However, this was slightly offset by a decrease in retail margins at company-owned stores.

Orders from Corporate and Licensed Stores Grew by 5.9%, driven by a 9.8% increase in company-owned retail stores. Wholesale sales to the open market were up approximately 1%.

Outdoor Sales Increased by 18% year-over-year, attributed to strong demand for outdoor furniture.

Retail Gross Margins Declined slightly due to lower margins for both in-line and clearance goods. Aggressive efforts to move through discontinued inventory contributed to this decline.

SG&A Expenses Decreased by 590 basis points as a percentage of retail sales, driven by ongoing operating expense efficiencies and higher sales.

E-commerce Sales Increased by single digits year-over-year, with an 18% rise in conversion rates despite a slight decline in website traffic. Improvements in the website experience contributed to this growth.

Bassett Custom Studio Orders Increased by 35% in Q3, with shipments up by 38%. Growth was driven by new and existing stores.

Wholesale Net Sales Increased by $3 million or 6.2% year-over-year, driven by a 9.2% increase in shipments to the retail store network and a 9.6% increase in Lane Venture shipments.

Wholesale Gross Margins Increased by 440 basis points year-over-year, driven by improved pricing strategies and greater leverage of fixed costs from higher sales levels.

Retail Net Sales Increased by $4.6 million or 9.8% year-over-year, attributed to higher sales and promotional activities.

Retail Backlog Decreased to $32.2 million from $37.1 million at November 30, 2024, and $33.3 million at August 31, 2024.

Operating Cash Flow Generated a deficit for the quarter, reducing cash and short-term investments by $5.2 million. The company ended the quarter with $54.6 million in cash and short-term investments and no outstanding debt.