BASSETT FURNITURE INDUSTRIES INC 10-Q

ITEM 1. FINANCIAL STATEMENTS BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED FEBRUARY 28, 2026 AND MARCH 1, 2025 – UNAUDITED (In thousands) Three Months Ended February 28, 2026 March 1, 2025 Operating activities: Net income $ 1,116 $ 1,854 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,236 2,246 Deferred income taxes ( 70 ) 587 Other, net 119 454 Changes in operating assets and liabilities: Accounts receivable ( 252 ) ( 1,037 ) Inventories ( 3,876 ) ( 3,138 ) Recoverable income taxes and other current assets 1,358 ( 615 ) Right of use assets under operating leases 4,208 4,211 Customer deposits ( 224 ) ( 390 ) Accounts payable and other liabilities ( 3,756 ) 709 Obligations under operating leases ( 6,327 ) ( 4,933 ) Net cash used in operating activities ( 5,468 ) ( 52 ) Investing activities: Purchases of property and equipment ( 863 ) ( 871 ) Other ( 25 ) ( 11 ) Net cash used in investing activities ( 888 ) ( 882 ) Financing activities: Cash dividends ( 1,730 ) ( 1,734 ) Other issuance of common stock 78 80 Repurchases of common stock ( 147 ) ( 721 ) Taxes paid related to net share settlement of equity awards ( 73 ) ( 136 ) Repayments of finance lease obligations ( 60 ) ( 44 ) Net cash used in financing activities ( 1,932 ) ( 2,555 ) Change in cash and cash equivalents ( 8,288 ) ( 3,489 ) Cash and cash equivalents - beginning of period 41,277 39,551 Cash and cash equivalents - end of period $ 32,989 $ 36,062 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 6 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. References to “ASC” included hereinafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board (“FASB”) as the source of authoritative GAAP. The condensed consolidated financial statements include the accounts of Bassett Furniture Industries, Incorporated (“Bassett”, “we”, “our”, or the “Company”) and our subsidiaries, all of which are wholly owned. In accordance with ASC Topic 810, we have evaluated our licensees and certain other entities to determine whether they are variable interest entities (“VIEs”) of which we are the primary beneficiary and thus would require consolidation in our financial statements. As of and for the periods ended February 28, 2026 and March 1, 2025 and as of November 29, 2025 we have concluded that none of the evaluated entities represent VIEs. Revenue from the sale of furniture and accessories is reported in the accompanying condensed consolidated statements of income net of estimates for returns and allowances. We exclude from revenues amounts collected from customers for sales tax. Certain amounts for the three months ended March 1, 2025 have been reclassified to conform to the current year’s presentation. See Note 13, Revenue Recognition. 2. Interim Financial Presentation and Other Information All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The results of operations for the three months ended February 28, 2026 are not necessarily indicative of results for the full fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended November 29, 2025. Certain prior period amounts have been reclassified to conform to current period presentation. Income Taxes 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 26.5 % 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. Supplemental Cash Flow Information During the three months ended February 28, 2026 and March 1, 2025, $ 2,787 and $ 0 , respectively, of lease right-of-use assets were added through the recognition of the corresponding lease obligations. Income tax refunds received, net of taxes paid, during the three months ended February 28, 2026 and March 1, 2025 were as follows: Quarter Ended February 28, 2026 March 1, 2025 Federal $ 1,979 $ - State 68 20 Total income tax refunds received, net $ 2,047 $ 20 Interest paid during the three months ended February 28, 2026 and March 1, 2025 was $ 15 and $ 4 , respectively. 7 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) Lessor Income We receive lease income as the lessor on a small number of leased premises which we have subleased to other tenants. Sublease income for closed stores and warehouses is included in selling, general and administrative expense in the accompanying condensed consolidated statements of income and was $ 155 and $ 103 for the three months ended February 28, 2026 and March 1, 2025, respectively. We also sublease one location to a licensee. This sublease income is included in other loss, net in the accompanying condensed consolidated statements of income and was $ 118 and $ 114 for the three months ended February 28, 2026 and March 1, 2026, respectively. 3. Financial Instruments and Investments Financial Instruments Our financial instruments include cash and cash equivalents, short-term investments in certificates of deposit (CDs), accounts receivable, and accounts payable. Because of their short maturities, the carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value. Investments Our short-term investments of $ 17,963 at both February 28, 2026 and November 29, 2025 consisted of CDs. At February 28, 2026, the CDs had original terms averaging seven months, bearing interest at rates ranging from 2.0 % to 4.1 % and the weighted average remaining time to maturity was approximately five months and the weighted average yield of the CDs was approximately 3.6 %. Each CD is placed with a federally insured financial institution and all deposits are within federal deposit insurance limits. Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at February 28, 2026 and November 29, 2025 approximates their fair value. 4. Accounts Receivable Accounts receivable consists of the following: February 28, 2026 November 29, 2025 Gross accounts receivable $ 15,125 $ 14,839 Allowance for credit losses ( 463 ) ( 429 ) Accounts receivable, net $ 14,662 $ 14,410 We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments. The allowance for credit losses is based on a review of specifically identified accounts in addition to an overall aging analysis which is applied to accounts pooled on the basis of similar risk characteristics. Judgments are made with respect to the collectability of accounts receivable within each pool based on historical experience, current payment practices and current economic conditions. Actual credit losses could differ from those estimates. We have elected to use the practical expedient under ASC Topic 326 which allows us to assume that current conditions as of the balance sheet date do not change over the expected life of the receivables, which is generally ninety days or less. 8 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) Activity in the allowance for credit losses for the three months ended February 28, 2026 and March 1, 2025 was as follows: Three Months Ended February 28, 2026 March 1, 2025 Beginning balance $ 429 $ 1,097 Additions charged to expense 47 18 Write-offs against allowance ( 13 ) ( 618 ) Ending balance $ 463 $ 497 Substantially all of the accounts receivable written off against the reserve during the three months ended February 28, 2026 and March 1, 2025 originated during our fiscal years ended November 29, 2025 and November 30, 2024, respectively. We believe that the carrying value of our net accounts receivable approximates fair value. The inputs into these fair value estimates reflect our market assumptions and are not observable. Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures . 5. Inventories Domestic furniture inventories are valued at the lower of cost, which is determined using the last-in, first-out (LIFO) method, or market. Imported inventories and those applicable to our Lane Venture and Bassett Outdoor lines are valued at the lower of cost, which is determined using the first-in, first-out (FIFO) method, or net realizable value. Inventories were comprised of the following: February 28, 2026 November 29, 2025 Wholesale finished goods $ 32,373 $ 30,746 Work in process 478 544 Raw materials and supplies 16,978 16,040 Retail merchandise 34,003 32,503 Total inventories on first-in, first-out method 83,832 79,833 LIFO adjustment ( 12,122 ) ( 12,016 ) Reserve for excess and obsolete inventory ( 6,044 ) ( 6,027 ) $ 65,666 $ 61,790 We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO. The need for these reserves is primarily driven by the normal product life cycle. As products mature and sales volumes decline, we rationalize our product offerings to respond to consumer tastes and keep our product lines fresh. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. In determining reserves, we calculate separate reserves on our wholesale and retail inventories. Our wholesale inventories tend to carry the majority of the reserves for excess quantities and obsolete inventory due to the nature of our distribution model. These wholesale reserves primarily represent design and/or style obsolescence. Typically, product is not shipped to our retail warehouses until a consumer has ordered and paid a deposit for the product. We do not typically hold retail inventory for stock purposes. Consequently, floor sample inventory and inventory for delivery to customers account for the majority of our inventory at retail. Retail reserves are based on accessory and clearance floor sample inventory in our stores and any inventory that is not associated with a specific customer order in our retail warehouses. 9 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) Activity in the reserves for excess quantities and obsolete inventory by segment are as follows: Three Months Ended February 28, 2026 Wholesale Segment Retail Segment Total Balance at November 29, 2025 $ 4,585 $ 1,442 $ 6,027 Additions charged to expense 434 176 610 Write-offs ( 427 ) ( 166 ) ( 593 ) Balance at February 28, 2026 $ 4,592 $ 1,452 $ 6,044 Three Months Ended March 1, 2025 Wholesale Segment Retail Segment Total Balance at November 30, 2024 $ 4,158 $ 1,237 $ 5,395 Additions charged to expense 365 161 526 Write-offs ( 192 ) ( 150 ) ( 342 ) Balance at March 1, 2025 $ 4,331 $ 1,248 $ 5,579 Our estimates and assumptions have been reasonably accurate in the past. We have not made any significant changes to our methodology for determining inventory reserves in 2026 and do not anticipate that our methodology is likely to change in the foreseeable future. 6. Goodwill The carrying amounts of goodwill by reportable segment, including accumulated impairment losses, at both February 28, 2026 and November 29, 2025 were as follows: Recorded Impairment Carrying Value Losses Amount Wholesale $ 9,188 $ ( 1,971 ) $ 7,217 Retail 1,926 ( 1,926 ) - Corporate and other 5,409 ( 5,409 ) - Total goodwill $ 16,523 $ ( 9,306 ) $ 7,217 7. Intangible Assets Intangible assets at February 28, 2026 and November 29, 2025 consisted of the following: February 28, 2026 November 29, 2025 Intangibles subject to amortization: Customer relationships $ 512 $ 512 Less accumulated amortization ( 464 ) ( 450 ) Intangibles subject to amortization, net 48 62 Intangibles not subject to amortization: Trade names 6,848 6,848 Total intangible assets $ 6,896 $ 6,910 10 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) Amortization expense associated with intangible assets during the three months ended February 28, 2026 and March 1, 2025 was as follows: Quarter Ended February 28, 2026 March 1, 2025 Intangible asset amortization expense $ 14 $ 14 Estimated future amortization expense for intangible assets that exist at February 28, 2026 is as follows: Remainder of fiscal 2026 $ 44 Fiscal 2027 4 Total $ 48 8. Bank Credit Facility On May 15, 2024, we entered into the Eighth Amended and Restated Credit Agreement with our bank (the “Credit Facility”). This Credit Facility provides for a line of credit of up to $ 25,000 . 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. Our bank charges a fee of 0.25 % on the daily unused balance of the line, payable quarterly. Under the terms of the Credit Facility, Consolidated Minimum Tangible Net Worth (as defined in the Credit Facility) shall at no time be less than $ 120,000 . In addition, we must maintain the following financial covenants, measured quarterly on a rolling twelve-month basis and commencing as of the end of the first fiscal quarter after the first date that the used commitment (the sum of any outstanding advances plus standby letters of credit) equals or exceeds $ 8,250 : ● Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.2 times and ● Consolidated Lease Adjusted Leverage to EBITDAR Ratio (as defined in the Credit Facility) not to exceed 3.35 times. 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 to January 31, 2029. 9. Post Employment Benefit Obligations Defined Benefit Plans We have an unfunded Supplemental Retirement Income Plan (the “Supplemental Plan”) that covers one current and certain former executives. The liability for the Supplemental Plan was $ 5,617 and $ 5,611 as of February 28, 2026 and November 29, 2025, respectively. We also have the Bassett Furniture Industries, Incorporated Management Savings Plan (the “Management Savings Plan”) which was established in the second quarter of fiscal 2017. The Management Savings Plan is an unfunded, non-qualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees. As part of the Management Savings Plan, we have made Long Term Cash Awards (“LTC Awards”) totaling $ 2,000 to five current and former management employees in the amount of $ 400 each. We are accounting for the LTC Awards as a defined benefit pension plan. Currently, two of those employees have retired and are receiving benefits. The liability for the LTC Awards was $ 1,393 and $ 1,379 as of February 28, 2026 and November 29, 2025, respectively. 11 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) Components of net periodic pension costs for our defined benefit plans for the three months ended February 28, 2026 and March 1, 2025 are as follows: Quarter Ended February 28, 2026 March 1, 2025 Service cost $ - $ 4 Interest cost 74 81 Amortization of loss ( 14 ) ( 16 ) Net periodic pension cost $ 60 $ 69 The components of net periodic pension cost other than the service cost component, which is included in selling, general and administrative expenses, are included in other loss, net in our condensed consolidated statements of income. Deferred Compensation Plans We have an unfunded deferred compensation plan that covers one current executive and certain former executives and provides for voluntary deferral of compensation. This plan has been frozen with no additional participants or deferrals permitted. Our liability under this plan was $ 1,580 and $ 1,562 as of February 28, 2026 and November 29, 2025, respectively. We also have an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees which was established under the Management Savings Plan. Our liability under this plan, including both accrued Company contributions and participant salary deferrals, was $ 4,181 and $ 3,968 as of February 28, 2026 and November 29, 2025, respectively. The non-current portion of the obligations under our defined benefit and deferred compensation plans are included in post employment benefit obligations in the accompanying balance sheets as follows: February 28, 2026 November 29, 2025 Defined benefit plans: Supplemental Plan $ 4,922 $ 4,917 LTC Awards 1,273 1,258 Total defined benefit plans 6,195 6,175 Deferred compensation plans: Management Savings Plan 4,181 3,968 Deferred Compensation Plan 1,253 1,236 Total deferred compensation plans 5,434 5,204 Post employment benefit obligations $ 11,629 $ 11,379 The current portion of these post employment benefit obligations totaled $ 1,142 at both February 28, 2026 and November 29, 2025 and is included in accrued compensation and benefits in the accompanying condensed consolidated balance sheets. We recognized expense under our deferred compensation arrangements during the three months ended February 28, 2026 and March 1, 2025 of $ 12 and $ 34 , respectively. 12 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) 10. Commitments and Contingencies We are involved in various legal and environmental matters which arise in the normal course of business. Although the final outcome of these matters cannot be determined, based on the facts presently known, we believe that the final resolution of these matters will not have a material adverse effect on our financial position or future results of operations. Lease Guarantees We were contingently liable under licensee lease obligation guarantees in the amounts of $ 3,902 and $ 4,148 at February 28, 2026 and November 29, 2025, respectively. The remaining term under these lease guarantees extends for six years. In the event of default by the licensee, we believe that the risk of loss is mitigated through a combination of options that include, but are not limited to, arranging for a replacement licensee or liquidating the collateral (primarily inventory). The proceeds of the above options are expected to cover the estimated amount of our future payments under the guarantee obligation, net of recorded reserves. The fair value of these lease guarantees (an estimate of the cost to the Company to perform on the guarantee) at February 28, 2026 and November 29, 2025 was not material. Lease Commitments At February 28, 2026, we had commitments for two leases of real property which are expected to commence during fiscal 2026. Together, these leases call for total annual rents averaging approximately $ 757 per year for an initial term of ten years. Both leases have two five -year renewal options. 11. Earnings Per Share Basic earnings per common share is computed by dividing net income allocable to common shares by the weighted average number of common shares outstanding, adjusted for participating securities, if any. The following reconciles basic and diluted earnings per share: Net Income Weighted Average Shares Earnings Per Share For the quarter ended February 28, 2026: Basic earnings per share $ 1,116 8,615,587 $ 0.13 Add effect of dilutive securities: Restricted shares - 36,291 - Diluted earnings per share $ 1,116 8,651,878 $ 0.13 For the quarter ended March 1, 2025: Basic earnings per share $ 1,854 8,678,770 $ 0.21 Add effect of dilutive securities: Restricted shares - 27,665 - Diluted earnings per share $ 1,854 8,706,435 $ 0.21 For the three months ended February 28, 2026 and March 1, 2025, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive: Quarter Ended February 28, 2026 March 1, 2025 Unvested shares - 61,413 13 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) 12. Segment Information We report segment information consistent with the way our chief operating decision maker (the “CODM”), a single individual who serves as our Board Chair, President and Chief Executive Officer, evaluates the operating results and performance of the Company. We have strategically aligned our business into two reportable segments as defined in ASC 280, Segment Reporting , and as described below: ● Wholesale. The wholesale home furnishings segment is involved principally in the design, manufacture, sourcing, sale and distribution of furniture products to a network of Bassett stores (Company-owned and licensee-owned retail stores) and independent furniture retailers. Our wholesale segment includes our wood and upholstery operations, which includes Lane Venture. ● Retail – Company-owned stores. Our retail segment consists of Company-owned stores and includes the revenues, expenses, assets and liabilities and capital expenditures directly related to these stores and the Company-owned distribution network utilized to deliver products to our retail customers. In addition to the two reportable segments described above, we include our remaining business activities and assets in a reconciling category known as Corporate and other. This category includes the shared costs of corporate functions such as treasury and finance, information technology, accounting, human resources, legal and others, including certain product development and marketing functions benefitting both wholesale and retail operations. In addition to property and equipment and various other assets associated with the shared corporate functions, the identifiable assets of Corporate and other include substantially all of our cash and our investments in CDs. 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 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. Inter-company income elimination includes the embedded wholesale profit in the Company-owned store inventory that has not been realized. These profits will be recorded when merchandise is delivered to the retail consumer. The inter-company income elimination also includes rent paid by our retail stores occupying Company-owned real estate. For the purpose of evaluating segment performance and allocating resources, our CODM uses a measure of income (loss) from operations excluding special items. These excluded items include such things as asset impairment charges, restructuring charges, and other unusual or infrequent gains and losses which management does not expect to recur on a regular routine basis. During the three months ended February 28, 2026 and March 1, 2025, there were no special items recognized in our results of operations. The CODM assesses performance by regularly reviewing each segment’s significant expense categories which include total cost of goods sold and total SG&A expenses. If these significant expense categories deviate from expected results, the CODM will delegate to his direct reports the task of investigating the underlying causes and, when necessary, making recommendations for remedial action to the CODM for his consideration and approval. 14 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) The following tables present our segment information: Quarter Ended February 28, 2026 Corporate & Intersegment Wholesale Retail Other Eliminations Consolidated Net sales to external customers $ 27,795 $ 52,545 $ - $ - $ 80,340 Intersegment sales 25,166 - - ( 25,166 ) - Total net sales 52,961 52,545 - ( 25,166 ) 80,340 Cost of goods sold 34,467 25,477 - ( 24,769 ) 35,175 SG&A expense 10,099 28,007 6,118 ( 311 ) 43,913 Other segment items - new store pre-opening costs - 95 - - 95 Income (loss) from operations $ 8,395 $ ( 1,034 ) $ ( 6,118 ) $ ( 86 ) 1,157 Interest income 553 Other loss, net ( 192 ) Income before income taxes $ 1,518 Quarter Ended March 1, 2025 Corporate & Intersegment Wholesale Retail Other Eliminations Consolidated Net sales to external customers $ 28,868 $ 53,294 $ - $ - $ 82,162 Intersegment sales 24,059 - - ( 24,059 ) - Total net sales 52,927 53,294 - ( 24,059 ) 82,162 Cost of goods sold 34,191 24,937 - ( 23,796 ) 35,332 SG&A expense 10,051 28,405 6,226 ( 307 ) 44,375 Income (loss) from operations $ 8,685 $ ( 48 ) $ ( 6,226 ) $ 44 2,455 Interest income 559 Other loss, net ( 459 ) Income before income taxes $ 2,555 Quarter Ended February 28, 2026 March 1, 2025 Depreciation and Amortization Wholesale $ 586 $ 590 Retail - Company-owned stores 1,003 1,010 Corporate and other 647 646 Consolidated $ 2,236 $ 2,246 Capital Expenditures Wholesale $ 46 $ 754 Retail - Company-owned stores 631 69 Corporate and other 186 48 Consolidated $ 863 $ 871 As of As of Identifiable Assets February 28, 2026 November 29, 2025 Wholesale $ 95,222 $ 92,805 Retail - Company-owned stores 141,035 140,507 Corporate and other 79,897 90,507 Consolidated $ 316,154 $ 323,819 See Note 13, Revenue Recognition, for disaggregated revenue information regarding sales of furniture and accessories by product type for the wholesale and retail segments. 15 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) 13. Revenue Recognition We recognize revenue when we transfer promised goods or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For our wholesale and retail segments, revenue is recognized when the risks and rewards of ownership and title to the product have transferred to the buyer. At wholesale, transfer occurs and revenue is recognized upon the shipment of goods to independent dealers and licensee-owned BHF stores. At retail, transfer occurs and revenue is recognized upon delivery of goods to the customer. All wholesale and retail revenues are recorded net of estimated returns and allowances based on historical patterns. Our accounts receivable, net, which are associated with our wholesale segment, were $ 14,662 , $ 14,410 , $ 14,218 and $ 13,181 at February 28, 2026, November 29, 2025, March 1, 2025 and November 30, 2024, respectively. We typically collect a significant portion of the purchase price from our retail customers as a deposit upon order, with the balance typically collected at the time delivery is scheduled. These customer deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $ 24,745 , $ 24,969 , $ 25,352 and $ 25,742 as of February 28, 2026, November 29, 2025, March 1, 2025 and November 30, 2024, respectively. Substantially all of the customer deposits held as of November 29, 2025 related to performance obligations that were satisfied during the current year-to-date period and have therefore been recognized in revenue for the three months ended February 28, 2026. Similarly, substantially all of the customer deposits held at February 28, 2026 are expected to be recognized as revenue within the next twelve months. Sales commissions are expensed as part of selling, general and administrative expenses at the time revenue is recognized because the amortization period would have been one year or less. Sales commissions at wholesale are accrued upon the shipment of goods. Sales commissions at retail are accrued at the time a sale is written (i.e. – when the customer’s order is placed) and are carried as prepaid commissions in other current assets until the goods are delivered and revenue is recognized. At February 28, 2026, November 29, 2025, March 1, 2025 and November 30, 2024, our balance of prepaid commissions included in other current assets was $ 2,656 , $ 2,662 , $ 2,805 and $ 2,928 , respectively. We exclude from revenue all amounts collected from customers for sales tax. We do not disclose amounts allocated to remaining unsatisfied performance obligations as they are expected to be satisfied within one year or less. Disaggregated revenue information for sales of furniture and accessories by product category for the three months ended February 28, 2026 and March 1, 2025, excluding intercompany transactions between our segments, is as follows: Quarter Ended February 28, 2026 March 1, 2025 (1) Wholesale Retail Total Wholesale Retail Total Bassett Custom Upholstery $ 17,979 $ 28,663 $ 46,642 $ 18,849 $ 31,187 $ 50,036 Bassett Leather Imports 4,089 1,208 5,297 4,112 234 4,346 Bassett Custom Wood 2,822 8,141 10,963 3,160 7,706 10,866 Bassett Casegoods 2,905 7,727 10,632 2,747 6,652 9,399 Accessories, mattresses and other (2) - 6,806 6,806 - 7,515 7,515 Consolidated net sales of furniture and accessories $ 27,795 $ 52,545 $ 80,340 $ 28,868 $ 53,294 $ 82,162 (1) Certain amounts within each category have been reclassified to conform to the 2026 presentation. (2) Includes the sale of goods other than Bassett-branded products, such as accessories and bedding, and also includes the sale of furniture protection plans. 16 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) 14. Changes to Stockholders ’ Equity The following changes in our stockholders’ equity occurred during the three months ended February 28, 2026 and March 1, 2025: Quarter Ended February 28, 2026 March 1, 2025 Common Stock: Beginning of period $ 43,256 $ 43,681 Issuance of common stock 63 79 Purchase and retirement of common stock ( 70 ) ( 298 ) End of period $ 43,249 $ 43,462 Common Shares Issued and Outstanding: Beginning of period 8,651,054 8,736,046 Issuance of common stock 12,628 15,735 Purchase and retirement of common stock ( 14,115 ) ( 59,647 ) End of period 8,649,567 8,692,134 Additional Paid-in Capital: Beginning of period $ - $ 6 Issuance of common stock 15 2 Purchase and retirement of common stock ( 120 ) ( 148 ) Stock based compensation 105 140 End of period $ - $ - Retained Earnings: Beginning of period $ 121,128 $ 122,847 Net income for the period 1,116 1,854 Purchase and retirement of common stock ( 30 ) ( 411 ) Cash dividends declared and paid ( 1,730 ) ( 1,734 ) End of period $ 120,484 $ 122,556 Accumulated Other Comprehensive Income: Beginning of period $ 723 $ 793 Amortization of pension costs, net of tax ( 10 ) ( 12 ) End of period $ 713 $ 781 17 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED FEBRUARY 28, 2026 (Dollars in thousands except share and per share data) 15. Recent Accounting Pronouncements Effective November 29, 2025, we adopted Accounting Standards Update 2023-07 – Segment Reporting (Topic ASC 740) Improvements to Reportable Segment Disclosures. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this update require: that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”); and that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. The enhanced disclosures required by ASU 2023-07 are reflected in our segment disclosures in Note 12. The adoption of this guidance related solely to disclosures and did not have an impact upon our financial position or results of operations. In December 2023, the FASB issued Accounting Standards Update 2023-09 – Income Taxes (Topic ASC 740) Income Taxes. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 become effective for us as of the end of our 2026 fiscal year. We are still assessing the impact of this guidance on our disclosures and plan to adopt ASU 2023-09 for our financial statements for the year ending November 28, 2026. In November 2024, the FASB issued Accounting Standards Update 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic ASC 220-40) Disaggregation of Income Statement Expenses. The amendments in this ASU require a public business entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity's expenses to help investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c) compare an entity's performance over time and with that of other entities. The amendments in ASU 2024-03 will become effective for us for our 2028 fiscal year and for interim periods beginning with our 2029 fiscal year. Early adoption is permitted. We do not expect that this guidance will have a material impact upon our financial position and results of operations. 18 of 31 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES FEBRUARY 28, 2026 (Dollars in thousands except share and per share data)