What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-01 compared with 2026-04-01 · 139 added, 90 removed, 196 unchanged (54% of the section changed)

26 unchanged sentences

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

20 unchanged sentences

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%.

Building on the 25% increase in web sales for fiscal 2025, written sales orders for the web increased 34% for the six months ended May 30, 2026 while delivered sales increased 30%.

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.

4 unchanged sentences

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.

During the second fiscal quarter we acquired one retail store from a former licensee in Cherry Hill, New Jersey and opened a new Company-owned store in the Cincinnati, Ohio market.

A second new Company-owned store in the Orlando, Florida market is expected to open by the end of fiscal 2026.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

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:

Results of Operations – Period ended May 30, 2026 compared with the period ended May 31, 2025:

Historically, housing activity, both new home sales and sales of existing homes, is a primary driver of furniture and home furnishings sales.

Since the COVID boom, housing prices have increased significantly along with the mortgage rates charged for home loans.

Many homeowners with historically low mortgage rates are reluctant to sell their homes, and buyers are hesitant to commit amid high prices, higher mortgage rates and economic uncertainty.

As a result, housing activity is significantly slower than historical trends resulting in reduced demand for furniture and home furnishings.

This has put pressure on furniture and home furnishings retailers and we have seen an increase in those retailers exiting the industry.

While our sales levels have decreased from the COVID period, we believe our sales have somewhat stabilized over the last couple of years.

In addition, we have gained efficiencies in our operations and reduced our overall expense structure to improve our results of operations.

Consolidated results of operations for the three and six months ended May 30, 2026 and May 31, 2025 are as follows:

Quarter Ended

February 28, 2026

March 1, 2025

Net sales of furniture and accessories

Cost of furniture and accessories sold

Six Months Ended

Cost of goods sold

SG&A expenses

2 unchanged sentences

Analysis of Quarterly Results:

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.

Total sales revenue for the three months ended May 30, 2026 decreased $595 or 0.7% from the prior year period.

This consisted of a $1,911 or 6.3% decrease in sales to external wholesale customers partially offset by a $1,316 or 2.4% increase in retail sales from our Company-owned stores.

Gross margins for the three months ended May 30, 2026 increased 90 basis points over the prior year period primarily due to higher margins in the wholesale business partially offset by lower margins in the 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 May 30, 2026 increased 60 basis points from 2025.

Excluding $698 of proceeds from business interruption insurance recorded as a reduction to SG&A expense in the second quarter of 2025 as a result of a cyber incident in fiscal 2024, SG&A expenses as a percentage of sales decreased 20 basis points as compared to 2025.

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

Analysis of Year-to-Date Results:

Total sales revenue for the six months ended May 30, 2026 decreased $2,417 or 1.5% from the prior year period.

This consisted of a $2,984 or 5.1% decrease in sales to external wholesale customers partially offset by a $567 or 0.5% increase in retail sales from our Company-owned stores.

Gross margins for the six months ended May 30, 2026 increased 10 basis points over the prior year period primarily due to lower margins in the retail business partially offset by improved margins in the wholesale business.

SG&A expenses (excluding new store pre-opening costs) as a percentage of sales for the six months ended May 30, 2026 increased 70 basis points from 2025.

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

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

6 unchanged sentences

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.

As of and for the three and six months ended May 30, 2026 and May 31, 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

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 February 28, 2026

Quarter Ended May 30, 2026

Non-GAAP Presentation

GAAP Presentation

Special Items

Non-Operating

Net sales of furniture and accessories

Cost of furniture and accessories sold

Cost of goods sold

New store pre-opening costs

1 unchanged sentence

Interest income

Other income, net

Income (loss) before income taxes

Quarter Ended May 31, 2025

Non-GAAP Presentation

GAAP Presentation

Non-Operating

Cost of goods sold

Income (loss) from operations

Interest income

Other loss, net

Income (loss) before income taxes

Quarter Ended March 1, 2025

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

(Dollars in thousands except share and per share data)

Six Months Ended May 30, 2026

Non-GAAP Presentation

1 unchanged sentence

Non-Operating

Net sales of furniture and accessories

Cost of furniture and accessories sold

Cost of goods sold

New store pre-opening costs

Income (loss) from operations

2 unchanged sentences

Income (loss) before income taxes

Six Months Ended May 31, 2025

Non-GAAP Presentation

GAAP Presentation

Non-Operating

Cost of goods sold

Income (loss) from operations

Interest income

Other loss, net

Income (loss) before income taxes

Notes to segment consolidation table:

4 unchanged sentences

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Wholesale Segment

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

Results for the wholesale segment for the three and six months ended May 30, 2026 and May 31, 2025 are as follows:

Quarter Ended

February 28, 2026

March 1, 2025

Six Months Ended

Gross profit (1)

5 unchanged sentences

Quarter Ended

February 28, 2026

March 1, 2025 (1)

May 31, 2025 (1)

Bassett Custom Upholstery

2 unchanged sentences

Bassett Casegoods

Six Months Ended

May 31, 2025 (1)

Bassett Custom Upholstery

Bassett Leather

Bassett Custom Wood

Bassett Casegoods

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 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.

Net sales for the three months ended May 30, 2026 decreased $1,082 or 2.0% from the prior year, consisting of a 5.5% decrease in shipments to the open market partially offset by a 1.0% increase in Lane Venture shipments to wholesale customers and a 0.8% increase in shipments to our retail store network.

The increase in shipments to our retail store network includes shipments of the Lane Venture brand, which we introduced in the BHF stores during the first quarter of 2026.

Total shipments of the Lane Venture brand, including the shipments to the retail store network, increased 17.9% from the prior year.

Gross margins for the three months ended May 30, 2026 increased 110 basis points from the prior year period primarily due to improved efficiencies in our domestic upholstery and wood operations coupled with improved pricing strategies in our imported wood offerings.

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.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

Analysis of Year-to-Date Results – Wholesale

Net sales for the six months ended May 30, 2026 decreased $1,048 or 1.0% from the prior year, consisting of a 5.4% decrease in shipments to the open market partially offset by a 0.7% increase in shipments to our retail store network and a 3.4% increase in Lane Venture shipments to wholesale customers.

The increase in shipments to our retail store network includes shipments of the Lane Venture brand, which we introduced in the BHF stores during the first quarter of 2026.

Total shipments of the Lane Venture brand, including the shipments to the retail store network, increased 23.6% from the prior year.

Gross margins for the six months ended May 30, 2026 increased 30 basis points from the prior year period primarily due to improved efficiencies in our domestic wood operations coupled with improved pricing strategies in our imported wood offerings.

SG&A expenses as a percentage of sales increased 50 basis points compared with the prior year period primarily due to increased outbound freight expenses from higher fuel costs.

Wholesale Backlog

Wholesale backlog at May 30, 2026 was $18,859 as compared to $19,519 at November 29, 2025 and $18,418 at May 31, 2025.

Retail – Company-owned Stores Segment

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

Results for the retail segment for the periods ended May 30, 2026 and May 31, 2025 are as follows:

Quarter Ended

February 28, 2026

March 1, 2025

Six Months Ended

Gross profit (1)

6 unchanged sentences

Quarter Ended

February 28, 2026

March 1, 2025 (1)

Six Months Ended

May 31, 2025 (1)

Bassett Custom Upholstery

6 unchanged sentences

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.

Net sales for the three months ended May 30, 2026 increased $1,316 or 2.4% over the prior year period.

Written sales (the value of sales orders taken but not delivered) increased 9.5% over the second quarter of 2025.

Gross margin for the three months ended May 30, 2026 declined 120 basis points from the prior period primarily due to lower margins on in-line goods as the full effect of the mid-January price increase was not realized for the entire quarter coupled with lower margins on clearance goods as we continue to be more aggressive in cycling through returned goods and floor samples.

SG&A expenses (excluding new store pre-opening costs) as a percentage of sales for the three months ended May 30, 2026 decreased 50 basis points from the prior year period.

Excluding $569 of proceeds from business interruption insurance recorded as a reduction to SG&A expense in the second quarter of 2025 as a result of a cyber incident in fiscal 2024, SG&A expenses as a percentage of sales decreased 150 basis points as compared to 2025.

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.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

(Dollars in thousands except share and per share data)

During the three months ended May 30, 2026, we incurred $473 of new store pre-opening costs associated with new stores in the Cincinnati, Ohio market, which opened late in the second quarter, and Orlando, Florida market, expected to open by the end of the third quarter of fiscal 2026.

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

8 unchanged sentences

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

FEBRUARY 28, 2026

(Dollars in thousands except share and per share data)

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

Analysis of Year-to-Date Results - Retail

Net sales for the six months ended May 30, 2026 increased $567 or 0.5% over the prior year.

Written sales (the value of sales orders taken but not delivered) increased 4.6% over the first six months of 2025.

Gross margin for the six months ended May 30, 2026 declined 140 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 coupled with lower margins on clearance goods as we continue to be more aggressive in cycling through returned goods and floor samples.

SG&A expenses (excluding new store pre-opening costs) as a percentage of sales for the six months ended May 30, 2026 decreased 30 basis points from the prior year period.

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.

During the six months ended May 30, 2026, we incurred $568 of new store pre-opening costs associated with new stores in the Cincinnati, Ohio market, which opened late in the second quarter, and Orlando, Florida market, expected to open by the end of the third quarter of fiscal 2026.

Retail Backlog

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

Retail backlog at May 30, 2026 was $34,701 compared to $34,402 at November 29, 2025 and $34,091 at May 31, 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.

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

SG&A expenses of Corporate and other for the periods ended May 30, 2026 and May 31, 2025 are as follows:

Quarter Ended

February 28, 2026

March 1, 2025

Six Months Ended

SG&A expenses

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

(Dollars in thousands except share and per share data)

Analysis of Results – Corporate and Other

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)

SG&A expenses included in Corporate and other for the three and six months ended May 30, 2026 decreased $462 or 7.1%, and $571 or 4.5%, respectively, from the prior year periods due primarily to lower incentive compensation costs.

Other Items Affecting Net Income

Interest Income

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.

Interest income for the three months ended May 30, 2026 declined $75 or 14.4% from the prior year due to lower interest income from CDs and interest-bearing cash.

Interest income for the six months ended May 30, 2026 declined $81 or 7.5% from the prior year as lower interest income on CDs and interest-bearing cash equivalents was partially offset by $99 of interest received as a Federal income tax refund during the first quarter of fiscal 2026.

Other Income (Loss), Net

Other income, net, for the three months ended May 30, 2026 was $87 compared to a net loss of $422 for the prior year period, primarily due to increases in the cash surrender value of Company-owned life insurance.

Other loss, net, for the six months ended May 30, 2026 declined $776 or 88% from the prior year period due to increases in the cash surrender value of 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 26.5% for the three months ended February 28, 2026.

Our effective tax rate was 26.5% for the three and six months ended May 30, 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.

Our effective tax rate was 26.1% and 26.8% for the three and six months ended May 31, 2025, respectively.

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

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.

Cash provided by operating activities for the first six months of fiscal 2026 was $1,896 compared to cash provided by operations of $6,903 for the first six months of fiscal 2025, representing a decline of $5,007 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.

Our overall cash position declined $5,375 during the first six months of 2026.

During the first six months of fiscal 2026, we spent $2,592 on purchases of property and equipment, including tenant improvements to our new locations in Cincinnati, Ohio and Orlando, Florida as well as our new wholesale showroom space in High Point, North Carolina.

We paid $470 to a former licensee to acquire a BHF located in Cherry Hill, New Jersey.

We also paid $3,443 in dividends during the first six months of 2026.

We repurchased $653 worth of shares under our stock repurchase program during the first six months of 2026 compared to repurchases of $1,158 in the prior year period.

We expect capital expenditures for the full year to range from $10 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.

As of May 30, 2026, $17,601 remains available for future purchases under our stock repurchase plan.

With cash and cash equivalents and short-term investments totaling $53,890 on hand at May 30, 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.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

(Dollars in thousands except share and per share data)

Debt and Other Obligations

1 unchanged sentence

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.

At May 30, 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.

4 unchanged sentences

Consolidated Lease Adjusted Leverage to EBITDAR Ratio 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.

At May 30, 2026, we were in compliance with the Consolidated Minimum Tangible Net Worth requirement.

Since our used commitment was less than $8,250 at May 30, 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.

3 unchanged sentences

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 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.

The present value of our obligations for leases with terms in excess of one year at May 30, 2026 is $88,517 and is included in our accompanying condensed consolidated balance sheet at May 30, 2026.

We were contingently liable under licensee lease obligation guarantees in the amount of $3,656 at May 30, 2026.

The remaining terms under these lease guarantees extend for five years.

See Note 10 to our condensed consolidated financial statements for additional details regarding our lease guarantees.

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.

Included among these benefits are two defined-benefit plans with a combined projected benefit obligation of $6,950 at May 30, 2026, the current portion of which is $815.

We also have deferred compensation plans with a total liability of $6,240 at May 30, 2026, the current portion of which is $327.

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

7 unchanged sentences

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

See Note 10 to our condensed consolidated financial statements for further information regarding certain contingencies as of May 30, 2026.

PART I-FINANCIAL INFORMATION-CONTINUED

BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES

(Dollars in thousands except share and per share data)

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