What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-04-01 compared with 2025-10-08 · 115 added, 187 removed, 171 unchanged (64% of the section changed)

26 unchanged sentences

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

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.

Bassett is a leading retailer, manufacturer and marketer of branded home furnishings.

11 unchanged sentences

These sales representatives are compensated based on a standard commission rate.

The Lane Venture outdoor brand was recently introduced in the Bassett Home Furnishings stores representing a new outlet for that brand.

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.

During the fourth quarter of fiscal 2022 we acquired Noa Home Inc.

(“Noa Home”).

A mid-priced e-commerce furniture retailer headquartered in Montreal, Canada, Noa Home had operations in Canada, Australia, Singapore and the United Kingdom.

After nearly two years of operating losses, we concluded during the second quarter of 2024 that Noa Home was not likely to achieve profitability at any time in the foreseeable future and decided to cease operations by selling the inventory in an orderly fashion.

As of November 30, 2024, we had substantially completed the liquidation of Noa Home’s assets and liabilities.

Digital outreach strategies have been the primary vehicle for brand advertising and customer acquisition.

We began supplementing the digital outreach strategy with added direct mail and television late in 2024 and expect to continue with a balanced blend of both digital and traditional direct mail and television in 2026.

We introduced a new web platform late in 2023 that leverages world class features including enhanced customer research capabilities and streamlined navigation.

Since the debut of the new site, we have seen increased engagement with the brand through a greater number of page views per customer along with more time spent on the site.

We have also seen an increase in average order value that has resulted in increased e-commerce revenue.

Building on the 25% increase in web sales for fiscal 2025, written sales orders for the web increased 28% for the quarter while delivered sales increased 46%.

Although e-commerce sales continue to be small relative to in-store sales, we will continue to invest in ongoing improvements to the aesthetics and user experience on our website while not compromising on our in-store experience or the quality of our in-home makeover capabilities.

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.

We also have a facility in Haleyville, Alabama where we manufacture aluminum frames for our outdoor furniture.

In addition to the furniture that we manufacture domestically, we source most of our formal bedroom and dining room furniture (casegoods) and certain leather upholstery offerings from several foreign plants, primarily in Vietnam.

Approximately 80% of our wholesale revenues are derived from products that are manufactured in the United States using a mix of domestic and globally sourced components and raw materials.

Over 75% of our wholesale revenues are derived from products that are manufactured in the United States using a mix of domestic and globally sourced components and raw materials.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Results of Operations – Periods ended August 30, 2025 compared with the periods ended August 31, 2024:

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

Results of Operations – Period ended February 28, 2026 compared with the period ended March 1, 2025:

Consolidated results of operations for the three months ended February 28, 2026 and March 1, 2025 are as follows:

Quarter Ended

Nine Months Ended*

August 30, 2025

August 31, 2024

August 30, 2025

August 31, 2024

February 28, 2026

March 1, 2025

Net sales of furniture and accessories

1 unchanged sentence

SG&A expenses

Loss on contract abandonment

Asset impairment charges

Income (loss) from operations

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

New store pre-opening costs

Income from operations

Analysis of Quarterly Results:

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.

Gross margins for the three months ended August 30, 2025 increased 320 basis points over the prior year period primarily due to margin improvements at wholesale partially offset by a slight decrease in retail margins from our Company-owned stores.

In addition, the wholesale gross margin in the prior year period was negatively impacted by $609 of unproductive labor costs incurred during the temporary shutdown resulting from the cybersecurity incident that occurred during the third quarter of fiscal 2024.

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.

Analysis of Year-to-Date Results:

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.

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.

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.

Total sales revenue for the three months ended February 28, 2026 decreased $1,822 or 2.2% from the prior year period primarily due to the impact of widespread winter weather disruptions in late January on store operations and retail and wholesale logistics.

This consisted of a $749 or 1.4% decrease in retail sales from our Company-owned stores and a $1,073 or 3.7% decrease in sales to external wholesale customers.

Gross margins for the three months ended February 28, 2026 decreased 80 basis points from the prior year period primarily due to lower margins in both the wholesale and retail business.

Selling, general and administrative (“SG&A”) expenses (excluding new store pre-opening costs) as a percentage of sales for the three months ended February 28, 2026 increased 70 basis points from 2025 reflecting reduced leverage of fixed costs due to lower sales levels.

Refer to the following discussions of quarterly results by segment for additional details.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

9 unchanged sentences

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.

As of and for the three months ended February 28, 2026 and March 1, 2025, Corporate and other included no other operating segments.

Inter-company net sales elimination represents the elimination of wholesale sales to our Company-owned stores.

4 unchanged sentences

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

4 unchanged sentences

The reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP is presented below along with the effects of various other intercompany eliminations on our consolidated results of operations.

Quarter Ended August 30, 2025

Non-GAAP Presentation

GAAP Presentation

Non-Operating

Net sales of furniture and accessories

Cost of furniture and accessories sold

Income (loss) from operations

Interest income

Other loss, net

Income (loss) before income taxes

Quarter Ended August 31, 2024

Non-GAAP Presentation

GAAP Presentation

Non-Operating

Net sales of furniture and accessories

Cost of furniture and accessories sold

Loss on contract abandonment

Income (loss) from operations

Interest income

Other loss, net

Income (loss) before income taxes

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

(Dollars in thousands except share and per share data)

Nine Months Ended August 30, 2025*

Quarter Ended February 28, 2026

Non-GAAP Presentation

GAAP Presentation

Corporate & Other

Special Items

Non-Operating

1 unchanged sentence

Cost of furniture and accessories sold

New store pre-opening costs

Income (loss) from operations

2 unchanged sentences

Income (loss) before income taxes

Nine Months Ended August 31, 2024*

Quarter Ended March 1, 2025

Non-GAAP Presentation

GAAP Presentation

Corporate & Other

Special Items

Non-Operating

1 unchanged sentence

Cost of furniture and accessories sold

Loss on contract abandonment

Asset impairment charges

Income (loss) from operations

2 unchanged sentences

Income (loss) before income taxes

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

Notes to segment consolidation table:

2 unchanged sentences

Represents the elimination of rent paid by our retail stores occupying Company-owned real estate.

Represents the charge for accruing the remaining minimum payments under a contract for logistical services in Riverside, CA which we no longer utilize.

Represents asset impairment charges of $2,887 and $727 in our retail and wholesale segments, respectively, a $1,827 charge for the impairment of the Noa Home trade name intangible asset, and a $74 charge for the impairment of Noa Home customized software.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Wholesale Segment

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

Results for the wholesale segment for the three months ended February 28, 2026 and March 1, 2025 are as follows:

Quarter Ended

Nine Months Ended*

August 30, 2025

August 31, 2024

August 30, 2025

August 31, 2024

February 28, 2026

March 1, 2025

Gross profit (1)

2 unchanged sentences

Gross profit at the segment level is considered a Non-GAAP financial measure due to the included effects of intercompany transactions.

Refer to the reconciliation of gross profit by segment to consolidated gross profit presented under the Reconciliation of Segment Results to Consolidated Results of Operations above.

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

Refer to the reconciliation of gross profit by segment to consolidated gross profit presented under the Reconciliation of Segment Results to Consolidated Income (Loss) Before Income Taxes above.

Wholesale sales by major product category are as follows:

Quarter Ended

August 30, 2025

August 31, 2024

Bassett Custom Upholstery

Bassett Leather

Bassett Custom Wood

Bassett Casegoods

Nine Months Ended*

August 30, 2025

August 31, 2024

February 28, 2026

March 1, 2025 (1)

Bassett Custom Upholstery

Bassett Leather

Bassett Leather Imports

Bassett Custom Wood

Bassett Casegoods

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

Certain amounts within the Bassett Custom Wood and Bassett Casegoods categories have been reclassified to conform with the 2026 presentation.

Analysis of Quarterly Results – Wholesale

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.

Net sales for the three months ended February 28, 2026 increased $34 or 0.1% over the prior year, consisting of a 0.6% increase in shipments to our retail store network and a 2.6% increase in Lane Venture shipments to wholesale customers partially offset by a 5.3% decrease in shipments to the open market.

As previously mentioned, we introduced the Lane Venture brand in the Bassett Home Furnishings stores during the first quarter of 2026 and have included those shipments in the above change in shipments to the retail store network.

Including those shipments in the total Lane Venture brand, shipments of that brand increased 32%.

Shipments were negatively impacted by winter weather as our major distribution centers were closed for multiple days during the quarter.

Gross margins for the three months ended February 28, 2026 decreased 50 basis points from the prior year period as margin decreases in the Bassett Custom Upholstery operations due to reduced leverage on fixed costs were partially offset by improved margins in the Bassett Casegoods operations due to improved pricing strategies.

SG&A expenses as a percentage of sales were essentially flat compared with the prior year period.

Wholesale Backlog

Wholesale backlog at February 28, 2026 was $16,745 as compared to $19,519 at November 29, 2025 and $19,515 at March 1, 2025.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Analysis of Year-to-Date Results – Wholesale

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.

Wholesale Backlog

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.

Retail – Company-owned Stores Segment

Results for the retail segment for the periods ended August 30, 2025 and August 31, 2024 are as follows:

Results for the retail segment for the periods ended February 28, 2026 and March 1, 2025 are as follows:

Quarter Ended

Nine Months Ended*

August 30, 2025

August 31, 2024

August 30, 2025

August 31, 2024

February 28, 2026

March 1, 2025

Gross profit (1)

SG&A expenses

New store pre-opening costs

Loss from operations

Gross profit at the segment level is considered a Non-GAAP financial measure due to the included effects of intercompany transactions.

Refer to the reconciliation of gross profit by segment to consolidated gross profit presented under the Reconciliation of Segment Results to Consolidated Results of Operations above.

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

Refer to the reconciliation of gross profit by segment to consolidated gross profit presented under the Reconciliation of Segment Results to Consolidated Income (Loss) Before Income Taxes above.

Retail sales by major product category are as follows:

Quarter Ended

Nine Months Ended*

August 30, 2025

August 31, 2024

August 30, 2025

August 31, 2024

February 28, 2026

March 1, 2025 (1)

Bassett Custom Upholstery

Bassett Leather

Bassett Leather Imports

Bassett Custom Wood

1 unchanged sentence

Accessories, mattresses and other (2)

Certain amounts within Bassett Custom Upholstery and Bassett Leather Imports have been reclassified to conform to the 2026 presentation.

Includes the sale of goods other than Bassett-branded products, such as accessories and bedding, and also includes the sale of furniture protection plans.

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

Analysis of Quarterly Results - Retail

Net sales for the three months ended February 28, 2026 decreased $749 or 1.4% from the prior year period due primarily to the previously mentioned winter weather disruptions during the last two weeks of January.

Written sales (the value of sales orders taken but not delivered) decreased 0.2% from the first quarter of 2025.

Gross margin for the three months ended February 28, 2026 declined 170 basis points from the prior period primarily due to lower margins on in-line goods as we did not institute a price increase related to the increased tariff costs until mid-January of 2026.

SG&A expenses (excluding new store pre-opening costs) as a percentage of sales for the three months ended February 28, 2026 were unchanged from the prior year period as reduced leverage of fixed costs due to lower sales levels was substantially offset by improved efficiency in the warehouse and delivery operation.

During the three months ended February 28, 2026, we incurred $95 of new store pre-opening costs associated with new stores in the Cincinnati, Ohio and Orlando, Florida markets, expected to open by the end of the second and third quarters of fiscal 2026, respectively.

Prior to opening a new store we incur such expenses as rent, training costs and other payroll-related costs.

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

Generally, rent payments during a buildout period between delivery of possession and opening of a new store are deferred and therefore straight-line rent expense recognized during that time does not require cash.

Inherent in our retail business model, we also incur losses in the two to three months of operation following a new store opening.

Like other furniture retailers, we do not recognize a sale until the furniture is delivered to our customer.

Because our retail business model does not involve maintaining a stock of retail inventory that would result in quick delivery and because of the custom nature of many of our furniture offerings, delivery to our customers usually occurs about 30 to 45 days after an order is placed.

We generally require a deposit at the time of order and collect the remaining balance when the furniture is delivered, at which time the sale is recognized.

Coupled with the previously discussed store pre-opening costs, total start-up losses can range from $400 to $600 per store.

We generally expect that new stores will operate at or above a retail break-even level within a reasonable period of time following store opening.

Factors affecting the length of time required to achieve this goal on a store-by-store basis may include the level of brand recognition, the degree of local competition and the depth of penetration in a particular market.

Even as new stores ramp up to break even, we do realize additional wholesale sales volume that leverages the fixed costs in our wholesale business.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Analysis of Quarterly Results - Retail

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.

Analysis of Year-to-Date Results – Retail

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.

Retail Backlog

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

Retail backlog at February 28, 2026 was $34,247 compared to $34,402 at November 29, 2025 and $36,143 at March 1, 2025.

Corporate and Other

In addition to the two reportable segments discussed above, we include our remaining business activities and assets in a reconciling category known as Corporate and other, which includes the shared costs of various corporate functions along with any operating segments that do not meet the requirements to be reportable segments.

Therefore, prior to fiscal 2025, Noa Home was included within the Corporate and other reconciling category and accounted for all of the sales and gross profit within this reconciling category.

Revenues, costs and expenses of Corporate and other for the periods ended August 30, 2025 and August 31, 2024 are as follows:

SG&A expenses of Corporate and other for the periods ended February 28, 2026 and March 1, 2025 are as follows:

Quarter Ended

Nine Months Ended*

August 30, 2025

August 31, 2024

August 30, 2025

August 31, 2024

February 28, 2026

March 1, 2025

SG&A expenses

*39 weeks for fiscal 2025 as compared with 40 weeks for fiscal 2024.

Analysis of Results – Corporate and Other

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.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

(Dollars in thousands except share and per share data)

SG&A expenses included in Corporate and other decreased $108 or 1.7% from the prior year primarily due to decreased corporate overhead spending from better expense management.

Other Items Affecting Net Income (Loss)

Interest Income

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.

Other Income (Loss), Net

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.

Interest income for the three months ended February 28, 2026 and March 1, 2025 was $553 and $559, respectively, a decrease of $6.

Lower interest income on CDs and interest-bearing cash equivalents was largely offset by $99 of interest received as a Federal income tax refund during the first quarter of fiscal 2026.

Other Loss, Net

Other loss, net, for the three months ended February 28, 2026 and March 1, 2025 was $192 and $459, respectively, a decline of $267 from the prior year period.

The net change from the prior year quarter and year to date was primarily due to lower net costs associated with Company-owned life insurance partially offset by increased interest expense from finance leases compared to the prior year period.

We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income or loss and use that effective tax rate to record our year-to-date income tax provision.

Any change in annual projections of pretax income or loss could have a significant impact on our effective tax rate for the respective quarter.

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.

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.

In July of 2025, new tax legislation was enacted under the One Big Beautiful Bill Act (the “Act”).

While the Act includes a wide range of provisions that could impact our financial results in future periods, we do not expect the passage of the Act to have a material impact on our results of operations or financial condition in the current fiscal year.

Liquidity and Capital Resources

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.

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.

Our effective tax rate was 26.5% for the three months ended February 28, 2026.

The effective rate differs from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences.

Our effective tax rate was 27.4% for the three months ended March 1, 2025.

The effective rate differs from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

AUGUST 30, 2025

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Liquidity and Capital Resources

Cash used in operating activities for the first three months of fiscal 2026 was $5,468 compared to cash used in operations of $52 for the first three months of fiscal 2025, representing a decline of $5,416 in cash flows from operations.

This decrease was primarily the result of lower income levels and negative changes in working capital which had been expected.

Our overall cash position declined $8,288 during the first three months of 2026.

During the first three months of fiscal 2026, we spent $863 on purchases of property and equipment.

We also paid $1,730 in dividends during the first three months of 2026.

We repurchased $147 of shares under our stock repurchase program during the first three months of 2026 compared to repurchases of $721 in the prior year period.

We expect capital expenditures for the full year to range from $8 million to $12 million.

As of February 28, 2026, $18,106 remains available for future purchases under our stock repurchase plan.

With cash and cash equivalents and short-term investments totaling $50,952 on hand at February 28, 2026, 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.

Debt and Other Obligations

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This Credit Facility provides for a line of credit of up to $25,000.

At August 30, 2025, we had $8,182 outstanding under standby letters of credit against our line.

At February 28, 2026, we had $5,866 outstanding under standby letters of credit against our line.

The line bears interest at the One-Month Term Secured Overnight Financing Rate (“One-Month Term SOFR”) plus 1.75% and is secured by our accounts receivable and inventory.

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Consolidated Lease Adjusted Leverage to EBITDAR Ratio not to exceed 3.35 times.

Since our used commitment was less than $8,250 at August 30, 2025, we were not required to test the Consolidated Fixed Charge Coverage Ratio or the Consolidated Lease Adjusted Leverage to EBITDAR Ratio.

At February 28, 2026, we were in compliance with the Consolidated Minimum Tangible Net Worth requirement.

Since our used commitment was less than $8,250 at February 28, 2026, we were not required to test the Consolidated Fixed Charge Coverage Ratio or the Consolidated Lease Adjusted Leverage to EBITDAR Ratio.

However, had we been required to test those ratios, we would have been in full compliance.

Our availability under the Credit Facility is currently $19,134.

On January 9, 2026, the Credit Facility was amended to extend the expiration date to January 31, 2029.

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 present value of our obligations for leases with terms in excess of one year at February 28, 2026 is $85,791 and is included in our accompanying condensed consolidated balance sheet at February 28, 2026.

We were contingently liable under licensee lease obligation guarantees in the amount of $3,902 at February 28, 2026.

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.

Investment in Retail Real Estate

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.

We provide post-employment benefits to certain current and former executives and management level employees of the Company.

Included among these benefits are two defined-benefit plans with a combined projected benefit obligation of $7,010 at February 28, 2026, the current portion of which is $815.

We also have deferred compensation plans with a total liability of $5,764 at February 28, 2026, the current portion of which is $330.

See Note 9 to our condensed consolidated financial statements for additional information regarding these plans.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Critical Accounting Policies and Estimates

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Although the final outcome of these matters cannot be determined, based on the facts presently known, it is our opinion that the final resolution of these matters will not have a material adverse effect on our financial position or future results of operations.

See Note 11 to our condensed consolidated financial statements for further information regarding certain contingencies as of August 30, 2025.

See Note 10 to our condensed consolidated financial statements for further information regarding certain contingencies as of February 28, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis