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 AUGUST 29, 2026 AND AUGUST 30, 2025 – UNAUDITED (In thousands) Nine Months Ended August 29, 2026 August 30, 2025 Operating activities: Net income $ 5,256 $ 4,573 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,747 6,626 Deferred income taxes ( 288 ) 1,307 Other, net 509 841 Changes in operating assets and liabilities: Accounts receivable 137 46 Inventories 2,581 ( 6,494 ) Recoverable income taxes and other current assets 1,779 1,690 Right of use assets under operating leases 12,769 12,768 Customer deposits ( 1,143 ) ( 2,593 ) Accounts payable and other liabilities ( 5,243 ) 393 Obligations under operating leases ( 15,091 ) ( 13,431 ) Net cash provided by operating activities 8,013 5,726 Investing activities: Purchases of property and equipment ( 6,875 ) ( 3,737 ) Cash paid for licensee acquisition ( 470 ) - Other ( 621 ) ( 408 ) Net cash used in investing activities ( 7,966 ) ( 4,145 ) Financing activities: Cash dividends ( 5,179 ) ( 5,210 ) Other issuance of common stock 265 249 Repurchases of common stock ( 779 ) ( 1,522 ) Taxes paid related to net share settlement of equity awards ( 76 ) ( 136 ) Repayments of finance lease obligations ( 183 ) ( 100 ) Net cash used in financing activities ( 5,952 ) ( 6,719 ) Change in cash and cash equivalents ( 5,905 ) ( 5,138 ) Cash and cash equivalents - beginning of period 41,277 39,551 . Cash and cash equivalents - end of period $ 35,372 $ 34,413 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 6 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 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, Consolidation , 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 August 29, 2026 and August 30, 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 and nine months ended August 30, 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 and nine months ended August 29, 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. 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 rates were 27.2 % and 26.8 % for the three and nine months ended August 29, 2026, 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. Our effective tax rate was 26.8 % for both the three and nine months ended August 30, 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 nine months ended August 29, 2026 and August 30, 2025, $ 9,228 and $ 378 , respectively, of lease right-of-use assets were added through the recognition of the corresponding lease obligations. 7 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) Income tax refunds received (taxes paid), net, during the nine months ended August 29, 2026 and August 30, 2025 were as follows: Nine Months Ended August 29, 2026 August 30, 2025 Federal $ 239 $ ( 200 ) State ( 4 ) ( 169 ) Total income tax refunds received (taxes paid), net $ 235 $ ( 369 ) Interest paid during the nine months ended August 29, 2026 and August 30, 2025 was $ 42 and $ 25 , respectively. 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 (“SG&A”) expense in the accompanying condensed consolidated statements of income and was $ 118 and $ 427 for the three and nine months ended August 29, 2026, respectively, and $ 149 and $ 399 for the three and nine months ended August 30, 2025, respectively. We also sublease one location to a licensee. This sublease income is included in other income (loss), net in the accompanying condensed consolidated statements of income and was $ 118 and $ 354 for the three and nine months ended August 29, 2026, respectively, and $ 114 and $ 343 for the three and nine months ended August 30, 2025, respectively. Licensee Acquisition Effective March 1, 2026, we acquired the operations of the Bassett Home Furnishings (“BHF”) store located in Cherry Hill, New Jersey for an all-cash purchase price of $ 470 with no other forms of consideration transferred. The store had been owned and operated by a licensee that had determined that continued ownership of a BHF store was no longer consistent with its future business objectives. We believe that Cherry Hill, New Jersey represents a viable market for a BHF store. The preliminary purchase price allocation was as follows: Inventory $ 70 Customer deposits ( 22 ) Other current liabilities ( 25 ) Net assets acquired 23 Goodwill 447 Purchase price $ 470 The allocation of the fair value of the acquired business was based on a preliminary valuation. Our estimates and assumptions are subject to change as we obtain additional information for our estimates during the measurement period (up to one year from the acquisition date). The primary area of the preliminary allocation of the purchase price that is not yet finalized relates to the estimate of certain accrued liabilities. The inputs into our valuation of the acquired assets reflect our market assumptions and are not observable. Consequently, the inputs are considered to be Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures . See Note 6, Goodwill, regarding the allocation of the goodwill to our reportable segments. The recognized goodwill of $ 447 is deductible for income tax purposes. We believe that the primary factor supporting the recognized goodwill is that the acquired licensee has established our brand in the greater Philadelphia, Pennsylvania market and this acquisition will enable us to maintain and grow our brand presence in that market. The acquisition is not material to our condensed consolidated financial statements and, accordingly, pro forma revenue and earnings disclosures are not material and have not been presented. Sales and operating losses generated by the Cherry Hill store subsequent to acquisition were not material for the three and nine months ended August 29, 2026. Acquisition costs were immaterial. 8 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) New Store Pre-Opening Costs Income from operations for the three and nine months ended August 29, 2026 includes new store pre-opening costs of $ 144 and $ 712 , respectively. Such costs consist of expenses incurred at the new store location during the period prior to its opening and include, among other things, facility occupancy costs such as rent and utilities and local store personnel costs related to pre-opening activities including training. New store pre-opening costs do not include costs which are capitalized in accordance with our property and equipment capitalization policies, such as leasehold improvements and store fixtures and equipment. Such capitalized costs associated with new stores are depreciated commencing with the opening of the store. There are no pre-opening costs associated with stores acquired from licensees, as such locations were already in operation at the time of their acquisition. Tariff Refund During 2025, the President of the United States imposed high tariffs on many imported goods, including many of our imported products, under the International Emergency Economic Powers Act of 1977 (“IEEPA”). We capitalize tariffs into the cost of imported inventory and recognize tariffs in the income statement as the products are sold to third party customers. In February of 2026, the U.S. Supreme Court invalidated the tariffs previously imposed under IEEPA. As a result, during the third quarter of fiscal 2026 we received $ 2,832 in tariff refunds from U.S. Customs and Border Protection. We have elected to recognize the tariff refunds as received. To the extent that the refund related to tariffs previously capitalized into inventory that had been sold through August 29, 2026, the benefit of the refund has been recognized in the income statement resulting in a $ 956 increase in gross profit for the three and nine months ended August 29, 2026. The cost of inventory on hand at August 29, 2026 has been reduced to reflect the remaining reversal of previously incurred IEEPA tariffs due to the refund, which will result in additional benefits to gross profit as those goods are sold, primarily during the fourth quarter of fiscal 2026. In connection with the tariff refund, we also received interest of $ 94 which is included in interest income for the three and nine months ended August 29, 2026. 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 $ 18,023 and $ 17,963 at August 29, 2026 and November 29, 2025, respectively, consisted of CDs. At August 29, 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 3.8 %. 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 August 29, 2026 and November 29, 2025 approximates their fair value. 9 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 4. Accounts Receivable Accounts receivable consists of the following: August 29, 2026 November 29, 2025 Gross accounts receivable $ 14,715 $ 14,839 Allowance for credit losses ( 442 ) ( 429 ) Accounts receivable, net $ 14,273 $ 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, Financial Instruments – Credit Losses , 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. Activity in the allowance for credit losses for the nine months ended August 29, 2026 and August 30, 2025 was as follows: Nine Months Ended August 29, 2026 August 30, 2025 Beginning balance $ 429 $ 1,097 Additions charged (recoveries credited) to expense 90 ( 67 ) Write-offs against allowance ( 77 ) ( 590 ) Ending balance $ 442 $ 440 Substantially all of the accounts receivable written off against the reserve during the three and nine months ended August 29, 2026 and August 30, 2025 originated during our fiscal years ended November 29, 2025 and November 30, 2024, respectively. Because the expected life of our trade receivables is short-term, we believe that the carrying value of our net accounts receivable approximates fair value. 10 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 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: August 29, 2026 November 29, 2025 Wholesale finished goods $ 25,418 $ 30,746 Work in process 571 544 Raw materials and supplies 16,322 16,040 Retail merchandise 34,742 32,503 Total inventories on first-in, first-out method 77,053 79,833 LIFO adjustment ( 12,239 ) ( 12,016 ) Reserve for excess and obsolete inventory ( 5,535 ) ( 6,027 ) $ 59,279 $ 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. Activity in the reserves for excess quantities and obsolete inventory by segment are as follows: Nine Months Ended August 29, 2026 Wholesale Segment Retail Segment Total Balance at November 29, 2025 $ 4,585 $ 1,442 $ 6,027 Additions charged to expense 1,038 711 1,749 Write-offs ( 1,717 ) ( 524 ) ( 2,241 ) Balance at August 29, 2026 $ 3,906 $ 1,629 $ 5,535 Nine Months Ended August 30, 2025 Wholesale Segment Retail Segment Total Balance at November 30, 2024 $ 4,158 $ 1,237 $ 5,395 Additions charged to expense 1,252 474 1,726 Write-offs ( 983 ) ( 318 ) ( 1,301 ) Balance at August 30, 2025 $ 4,427 $ 1,393 $ 5,820 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. 11 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 6. Goodwill The carrying amounts of goodwill by reportable segment, net of accumulated impairment losses, were as follows: Wholesale Retail Corporate & Other Total Balance as of November 29, 2025 $ 7,217 $ - $ - $ 7,217 Goodwill arising from licensee acquisition (Note 2) 406 41 - 447 Balance as of August 29, 2026 $ 7,623 $ 41 $ - $ 7,664 Accumulated impairment losses at both August 29, 2026 and November 29, 2025 were as follows: Wholesale Retail Corporate & Other Total Accumulated impairment losses $ 1,971 $ 1,926 $ 5,409 $ 9,306 7. Intangible Assets Intangible assets at August 29, 2026 and November 29, 2025 consisted of the following: August 29, 2026 November 29, 2025 Intangibles subject to amortization: Customer relationships $ 512 $ 512 Less accumulated amortization ( 493 ) ( 450 ) Intangibles subject to amortization, net 19 62 Intangibles not subject to amortization: Trade names 6,848 6,848 Total intangible assets $ 6,867 $ 6,910 Amortization expense associated with intangible assets during the three and nine months ended August 29, 2026 and August 30, 2025 was as follows: Quarter Ended Nine Months Ended August 29, 2026 August 30, 2025 August 29, 2026 August 30, 2025 Intangible asset amortization expense $ 14 $ 14 $ 43 $ 43 Estimated future amortization expense for intangible assets that exist at August 29, 2026 is as follows: Remainder of fiscal 2026 $ 14 Fiscal 2027 5 Total $ 19 12 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 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 August 29, 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 August 29, 2026, we were in compliance with the Consolidated Minimum Tangible Net Worth requirement. Since our used commitment was less than $ 8,250 at August 29, 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 as of August 29, 2026 is $ 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 executive and certain former executives. The liability for the Supplemental Plan was $ 5,627 and $ 5,611 as of August 29, 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 $ 1,343 and $ 1,379 as of August 29, 2026 and November 29, 2025, respectively. Components of net periodic pension costs for our defined benefit plans for the three and nine months ended August 29, 2026 and August 30, 2025 are as follows: Quarter Ended Nine Months Ended August 29, 2026 August 30, 2025 August 29, 2026 August 30, 2025 Service cost $ - $ 4 $ - $ 11 Interest cost 74 81 221 244 Amortization of loss ( 14 ) ( 16 ) ( 42 ) ( 49 ) Net periodic pension cost $ 60 $ 69 $ 179 $ 206 The components of net periodic pension cost other than the service cost component, which is included in SG&A expenses, are included in other income (loss), net in our condensed consolidated statements of income. 13 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 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 $ 1,615 and $ 1,562 as of August 29, 2026 and November 29, 2025, respectively. We have an additional unfunded 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 $ 4,795 and $ 3,968 as of August 29, 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: August 29, 2026 November 29, 2025 Defined benefit plans: Supplemental Plan $ 4,932 $ 4,917 LTC Awards 1,223 1,258 Total defined benefit plans 6,155 6,175 Deferred compensation plans: Management Savings Plan 4,795 3,968 Deferred Compensation Plan 1,288 1,236 Total deferred compensation plans 6,083 5,204 Post employment benefit obligations $ 12,238 $ 11,379 The current portion of these post employment benefit obligations totaled $ 1,142 at both August 29, 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 and nine months ended August 29, 2026 and August 30, 2025 as follows: Quarter Ended Nine Months Ended August 29, 2026 August 30, 2025 August 29, 2026 August 30, 2025 Deferred compensation expense $ 173 $ 298 $ 581 $ 414 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 $ 3,410 and $ 4,148 at August 29, 2026 and November 29, 2025, respectively. The remaining term under these lease guarantees extends for approximately four years. 14 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 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 August 29, 2026 and November 29, 2025 was not material. Lease Commitments At August 29, 2026, we had a commitment for one lease of real property which is expected to commence during fiscal 2027. This lease calls for total annual rents averaging approximately $ 403 per year for an initial term of ten years. The lease has 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 August 29, 2026 Basic earnings per share $ 2,101 8,605,457 $ 0.24 Add effect of dilutive securities: Restricted shares - 33,658 - Diluted earnings per share $ 2,101 8,639,115 $ 0.24 For the quarter ended August 30, 2025 Basic earnings per share $ 801 8,650,651 $ 0.09 Add effect of dilutive securities: Restricted shares - 24,564 - Diluted earnings per share $ 801 8,675,215 $ 0.09 For the Nine Months Ended August 29, 2026 Basic earnings per share $ 5,256 8,613,154 $ 0.61 Add effect of dilutive securities: Restricted shares - 24,261 - Diluted earnings per share $ 5,256 8,637,415 $ 0.61 For the Nine Months Ended August 30, 2025 Basic earnings per share $ 4,573 8,665,776 $ 0.53 Add effect of dilutive securities: Restricted shares - 22,172 - Diluted earnings per share $ 4,573 8,687,948 $ 0.53 For the three and nine months ended August 29, 2026 and August 30, 2025, the following potentially dilutive shares were excluded from the computations as their effect was anti-dilutive: Quarter Ended Nine Months Ended August 29, 2026 August 30, 2025 August 29, 2026 August 30, 2025 Unvested shares 3,000 - 30,856 - 15 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 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 Topic 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 benefiting 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. As of and for the three and nine months ended August 29, 2026 and August 30, 2025, Corporate and other included no other operating segments. Intercompany net sales elimination represents the elimination of wholesale sales to our Company-owned stores. Intercompany 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 intercompany 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 routine basis. During the three and nine months ended August 29, 2026 and August 30, 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. 16 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) The following tables present our results of operations by segment: Quarter Ended August 29, 2026 Wholesale Retail Consolidated Net sales to external customers $ 28,603 $ 54,235 $ 82,838 Intersegment sales 25,089 - 25,089 Total net sales 53,692 54,235 107,927 Less intersegment sales ( 25,089 ) Consolidated net sales $ 82,838 Less: Cost of goods sold 34,024 26,317 SG&A expense 10,351 28,027 Other segment items - new store pre-opening costs - 144 Segment income (loss) from operations $ 9,317 $ ( 253 ) $ 9,064 Reconciliation of profit or loss: Unallocated corporate expenses ( 6,620 ) Elimination of intersegment loss 338 Consolidated income from operations 2,782 Interest income 480 Other loss, net ( 375 ) Income before income taxes $ 2,887 Quarter Ended August 30, 2025 Wholesale Retail Consolidated Net sales to external customers $ 28,212 $ 51,891 $ 80,103 Intersegment sales 22,575 - 22,575 Total net sales 50,787 51,891 102,678 Less intersegment sales ( 22,575 ) Consolidated net sales $ 80,103 Less: Cost of goods sold 32,950 24,710 SG&A expense 9,782 27,514 Segment income (loss) from operations $ 8,055 $ ( 333 ) $ 7,722 Reconciliation of profit or loss: Unallocated corporate expenses ( 7,419 ) Elimination of intersegment loss 290 Consolidated income from operations 593 Interest income 472 Other income, net 30 Income before income taxes $ 1,095 17 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) Nine Months Ended August 29, 2026 Wholesale Retail Consolidated Net sales to external customers $ 84,604 $ 162,327 $ 246,931 Intersegment sales 75,196 - 75,196 Total net sales 159,800 162,327 322,127 Less intersegment sales ( 75,196 ) Consolidated net sales $ 246,931 Less: Cost of goods sold 102,847 78,879 SG&A expense 31,013 84,354 Other segment items - new store pre-opening costs - 712 Segment income (loss) from operations $ 25,940 $ ( 1,618 ) $ 24,322 Reconciliation of profit or loss: Unallocated corporate expenses ( 18,797 ) Elimination of intersegment loss 657 Consolidated income from operations 6,182 Interest income 1,479 Other loss, net ( 480 ) Income before income taxes $ 7,181 Nine Months Ended August 30, 2025 Wholesale Retail Consolidated Net sales to external customers $ 87,196 $ 159,417 $ 246,613 Intersegment sales 70,747 - 70,747 Total net sales 157,943 159,417 317,360 Less intersegment sales ( 70,747 ) Consolidated net sales $ 246,613 Less: Cost of goods sold 102,789 75,485 SG&A expense 30,124 83,831 Segment income from operations $ 25,030 $ 101 $ 25,131 Reconciliation of profit or loss: Unallocated corporate expenses ( 20,166 ) Elimination of intersegment loss 580 Consolidated income from operations 5,545 Interest income 1,552 Other loss, net ( 851 ) Income before income taxes $ 6,246 18 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) Additional segment information is as follows: Quarter Ended Nine Months Ended August 29, 2026 August 30, 2025 August 29, 2026 August 30, 2025 Depreciation and Amortization Wholesale $ 575 $ 563 $ 1,750 $ 1,749 Retail - Company-owned stores 1,015 940 3,064 2,932 Corporate and other 640 645 1,933 1,945 Consolidated $ 2,230 $ 2,148 $ 6,747 $ 6,626 Capital Expenditures Wholesale $ 2,206 $ 410 $ 2,546 $ 1,525 Retail - Company-owned stores 1,834 860 3,775 1,641 Corporate and other 243 192 554 571 Consolidated $ 4,283 $ 1,462 $ 6,875 $ 3,737 As of As of Identifiable Assets August 29, 2026 November 29, 2025 Wholesale $ 93,018 $ 92,805 Retail - Company-owned stores 136,528 140,507 Corporate and other 82,595 90,507 Consolidated $ 312,141 $ 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. 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 control of the product transfers to the customer. 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 $ 14,273 , $ 14,410 , $ 13,135 and $ 13,181 at August 29, 2026, November 29, 2025, August 30, 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 $ 23,848 , $ 24,969 , $ 23,149 and $ 25,742 as of August 29, 2026, November 29, 2025, August 30, 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 nine months ended August 29, 2026. Similarly, substantially all of the customer deposits held at August 29, 2026 are expected to be recognized as revenue within the next twelve months. Sales commissions are expensed as part of SG&A 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 August 29, 2026, November 29, 2025, August 30, 2025 and November 30, 2024, our balance of prepaid commissions included in other current assets was $ 2,568 , $ 2,662 , $ 2,537 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. 19 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) Disaggregated revenue information for sales of furniture and accessories by product category for the three and nine months ended August 29, 2026 and August 30, 2025, excluding intercompany transactions between our segments, is as follows: Quarter Ended August 29, 2026 August 30, 2025 Wholesale Retail Total Wholesale Retail (1) Total Bassett Custom Upholstery $ 19,759 $ 31,064 $ 50,823 $ 18,704 $ 30,387 $ 49,091 Bassett Leather Imports 3,816 731 4,547 3,865 490 4,355 Bassett Custom Wood 2,626 8,017 10,643 2,669 6,783 9,452 Bassett Casegoods 2,402 7,366 9,768 2,974 7,308 10,282 Accessories, mattresses and other (2) - 7,057 7,057 - 6,923 6,923 Consolidated net sales of furniture and accessories $ 28,603 $ 54,235 $ 82,838 $ 28,212 $ 51,891 $ 80,103 Nine Months Ended August 29, 2026 August 30, 2025 Wholesale Retail Total Wholesale Retail (1) Total Bassett Custom Upholstery $ 56,879 $ 92,688 $ 149,567 $ 57,555 $ 92,572 $ 150,127 Bassett Leather Imports 11,916 2,050 13,966 11,894 1,058 12,952 Bassett Custom Wood 8,137 24,277 32,414 9,016 22,957 31,973 Bassett Casegoods 7,672 22,173 29,845 8,731 21,031 29,762 Accessories, mattresses and other (2) - 21,139 21,139 - 21,799 21,799 Consolidated net sales of furniture and accessories $ 84,604 $ 162,327 $ 246,931 $ 87,196 $ 159,417 $ 246,613 (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. 20 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 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 and nine months ended August 29, 2026 and August 30, 2025: Quarter Ended Nine Months Ended August 29, 2026 August 30, 2025 August 29, 2026 August 30, 2025 Common Stock: Beginning of period $ 43,157 $ 43,410 $ 43,256 $ 43,681 Issuance of common stock 83 85 231 250 Purchase and retirement of common stock ( 42 ) ( 117 ) ( 289 ) ( 553 ) End of period $ 43,198 $ 43,378 $ 43,198 $ 43,378 Common Shares Issued and Outstanding: Beginning of period 8,631,293 8,681,851 8,651,054 8,736,046 Issuance of common stock 16,681 16,978 46,265 50,167 Purchase and retirement of common stock ( 8,499 ) ( 23,311 ) ( 57,844 ) ( 110,695 ) End of period 8,639,475 8,675,518 8,639,475 8,675,518 Additional Paid-in Capital: Beginning of period $ - $ - $ - $ 6 Issuance of common stock 8 1 33 ( 1 ) Purchase and retirement of common stock ( 83 ) ( 167 ) ( 342 ) ( 478 ) Stock based compensation 131 166 365 473 End of period $ 56 $ - $ 56 $ - Retained Earnings: Beginning of period $ 120,617 $ 122,597 $ 121,128 $ 122,847 Net income for the period 2,101 801 5,256 4,573 Purchase and retirement of common stock - ( 81 ) ( 223 ) ( 627 ) Cash dividends declared and paid ( 1,736 ) ( 1,734 ) ( 5,179 ) ( 5,210 ) End of period $ 120,982 $ 121,583 $ 120,982 $ 121,583 Accumulated Other Comprehensive Income: Beginning of period $ 702 $ 769 $ 723 $ 793 Amortization of pension costs, net of tax ( 10 ) ( 12 ) ( 31 ) ( 36 ) End of period $ 692 $ 757 $ 692 $ 757 21 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 29, 2026 (Dollars in thousands except share and per share data) 15. Recent Accounting Pronouncements Effective December 1, 2024, we adopted Accounting Standards Update 2023-07 – Segment Reporting (Topic ASC 280) 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, Segments. The adoption of this guidance related solely to disclosures and did not have an impact upon our financial position or results of operations. This guidance was initially applied for our annual financial statements for the year ended November 29, 2005 and for interim periods beginning in fiscal 2026. This guidance was applied retrospectively to all periods presented. 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. 22 of 37 PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES AUGUST 29, 2026 (Dollars in thousands except share and per share data)