Bassett Furniture Industries Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 10, 2025

Key Takeaways

  • Positive Sentiment: Bassett reported 1.1% consolidated sales growth (2.5% ex-NOAH Home) and recorded a $2.5 million operating profit versus a loss last year, delivering $0.22 EPS.
  • Negative Sentiment: The company flagged a challenging housing and remodeling environment, with high interest rates and trade tariffs prompting 3–5% wholesale price increases.
  • Positive Sentiment: Restructuring efforts drove a 330 basis-point SG&A reduction and a 30 bp gross margin improvement, reflecting ongoing cost optimization.
  • Positive Sentiment: E-commerce momentum remained strong as online sales rose 31% in Q2 with higher conversion rates despite flat site traffic.
  • Neutral Sentiment: Wholesale orders from Bassett-owned stores climbed 9.6%, while open-market shipments fell 6.6%, leaving total wholesale backlog at $18.4 million.
AI Generated. May Contain Errors.
Earnings Conference Call
Bassett Furniture Industries Q2 2025
00:00 / 00:00

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Operator

Good day, thank you for standing by. Welcome to the Best Furniture's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please note that today's conference may be recorded.

Operator

I will now hand the conference over to your first speaker, Mr. Mike Daniel, Chief Financial Officer. Please go ahead.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Thank you, Olivia, for the introduction. Welcome to Bassett Furniture's earnings call for the second quarter of fiscal twenty twenty five ended 05/31/2025. Joining me today is our Chairman and CEO, Rob Spielman. We issued our news release yesterday after the market closed and it's available on our website. We will be filing our Form 10 Q early this morning and that too will be on the website.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

After today's remarks, we will open the call up for a Q and A session. We will post a transcript of the call on Bassett's investor website following the conference call. During today's call, certain statements we make may be considered forward looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Company cannot agree to or cannot guarantee the accuracy of any forecast or estimate nor does it take any obligation to update such forward looking statements.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

For more information, including important cautionary notes, please see the company's annual report on Form 10 ks for the fiscal year ending 11/30/2024. Other filings with the SEC describing risks related to our business are available on our corporate website under the Investor tab. Now I'll turn things over to Rob. Rob?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Okay. Thank you, Mike. Good morning, everyone, and thank you for joining us. One year ago this quarter, Bassett announced a five point restructuring strategy designed to grow business and improve profitability. We've been aggressively implementing that plan, which included development of a pipeline of innovative products to support our reputation as a company provides quality craftsmanship in the wholesale and retail channels and custom design services.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

All of us as a ambassador organization remain focused on executing these initiatives to meet these goals and reduce costs. I'm happy to report that our second quarter results have improved again like last quarter despite a very challenging sales environment that affects our entire industry. Consumers face historically weak housing market, high interest rates, uncertainty about the impact that the trade tariffs have on the cost of goods. This lack of confidence makes them very hesitant about investing in home furnishings right now. We believe that our restructuring program continues to have positive effect on our results and our future strategy.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We grew consolidated sales slightly, up 1.1% from last year's second quarter. Excluding sales from Noah Home, Inc, which closed in late twenty twenty four, consolidated revenue from the ongoing business increased 2.5%. Efforts to reduce our cost structure that began this time last year, coupled with higher levels of operating efficiency in both our wholesale and retail segments, delivered $2,500,000 of operating profit or 3% of sales compared to a loss this time last year. Before I get to our detailed comments for the second quarter, it's important to reiterate how tough the housing and remodeling environment is in 2025, and we don't see that changing for the foreseeable future. The spring is normally the busiest time of the year for housing sales, and that activity flows to the home furnishings industry.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Recent headline pointed to data from the National Association of Realtors showing existing home sales edged up 0.8% in May, ending at two month streak of declines. However, that was the slowest pace for any May since 02/2009. Affordability remains a drag on housing, and like others, we are watching for some form of stimulus to spur mortgage activity and greater home sales and remodeling activity. Our strategic plan for this fiscal year was based on a continuation of the tepid housing market and that has character that has characterized the past three years. The decisions and the investments we have made on new lines and product launches, expanding e commerce capabilities, and modifying our marketing activities are making a difference.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

That said, we have had to adjust the to the impact of tariffs that panel our supply chain and more importantly, on consumer confidence in general. We are somewhat insulated versus others in the industry because almost 80% of our wholesale shipments are manufactured or assembled in our five US factory. But the fabrics, plywood, componentry, and finished goods that we do import from countries like Vietnam and India made it necessary to raise wholesale prices three to 5% in the quarter, something that we did not want to do in the current environment. We've also been successful in working intently with various fabric vendors to mitigate the effects of tariffs on further price hikes. We're closely watching the outcome of the final trade agreements, and our teams are monitoring the tariff activity daily as these challenges affect future orders and product in transit.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

The dawning of Liberation Day, April, represented a direct line of demarcation between the more robust order pace that started the year and the slowness we clearly saw in the second quarter. March sales started off fine, but the rest of the quarter was down. Orders to our combined corporate and licensed store network grew by 9.6%, while our wholesale business from the open market declined by 6.6%, thus netting a 2.7% increase in all wholesale orders for the period. Our core products led by our true custom upholstery with last year's addition of leather drove most of the year over year improvement. Domestic motion and reclining product was also strong.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

As discussed last quarter, we recommitted to whole home wood collections this year with three new offerings. The first, Copenhagen, is retailing well, and we are very pleased reaction to the 35 piece Newberry collection at the April home furnishings market. Newberry will arrive in Bassett stores and independent retailers this fall, followed later by the Andorra collection. Also, in wood product, our new domestic Benchmade Hideaway dining program sold very well in wholesale this spring and will begin laboring our factory here in Virginia in July and August. Bolstered in part by stronger sales in Q1, corporate retail deliveries increased by 7.5% and operating performance improved significantly compared to 2024.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Written sales in the stores declined by 0.8%. Most of the key performance metrics were static during the quarter, although higher close ratios in the stores kept written sales almost flat while store traffic declined. Belt tightening from last year and restructuring in our marketing meant that we spent $1,000,000 less in SG and A investments on 3,800,000 more in delivered sales. The current pace of sales mandates that we continue to closely monitor all expenditures in the retail fleet. We've made progress on turning discontinued as is inventory into cash.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

And while the discounting will modestly affect retail gross margin, this plan is in place for the rest of the year. Wholesale sales to customers outside the Bassett store network were a mixed bag, but ultimately down by 6.6%. I noted earlier that March was strong, and almost all of the decline here occurred in April. The decline was largely due to lower sales and our club level program, particularly with those accounts that generally buy containers directly from our vendors in Asia. There has been a natural hesitancy from these dealers to commit to imported goods in large quantities until greater clarity is attained on the tariff question.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Once again, we are looking forward to getting the large product introduction from the April show on the retail floors this fall as we felt we had a particularly strong market of placements in April. We're also encouraged by the progress from investments in our omnichannel model to enhance the retail customer experience. Written sales at bassetfurniture.com were up 31% in the second quarter versus last year despite the housing issues, and this follows an increase of 36% in q one. While website traffic was flat for the quarter, we have much higher levels of conversion, and we're reaching customers where we don't have physical stores. We continue to tweak the technology drivers to improve traffic, the user experience, and our site conversions.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We made changes to our marketing mix in the second quarter to drive brand awareness, introduce new product lines, and to emphasize our custom design services. Last year, we relied exclusively on digital marketing for the quarter. This spring, we had success in using direct mail for the launch of the Copenhagen line and is now part of our marketing strategy for the remainder of the year. We tested spot TV in key markets with mixed results. We brought back our private sale to key customers three weeks ahead of the public Memorial Day sales event, allowing them to get ahead of the rush and have more opportunity in inventory.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

This strategy effectively pulled our holiday business forward and resulted in a slight increase in written business for the month of May. Promotional events like July 4 are key to driving traffic, which was weak through June. Our new Bassett custom studio program in the open market grew by double digits as we added seven new retail stores. We also grew our business with the interior design community and are working hard to become a bigger provider to the design channel that continues to grow in importance to the entire industry. We are moving ahead with architectural plans to open in two new markets, Cincinnati and Orlando.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We plan to start construction this fall on both locations and expect to have these stores open in the first quarter of fiscal twenty twenty six. Our Concord, North Carolina corporate store has been closed since April for remodeling and will reopen in October. Our board of directors will consider our regular quarterly cash dividend of $0.20 per share next week. Dividends augmented by opportunistic share repurchase remain a key piece of our capital return to shareholders. Now I'll turn things back over to Mike for more details on our financial results. Mike?

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Thanks, Rob. In my commentary, the comparisons I'll discuss will be the second quarter of twenty twenty five compared to the second quarter of fiscal twenty twenty four unless otherwise noted. As Rob previously noted, total consolidated revenue increased $938,000 or 1.1%. And again, excluding sales from NOAA Home Inc, which closed in late twenty twenty four, consolidated revenues increased 2.5%. Consolidated gross margin at 55.6% represented a three ten basis point improvement over the prior year as the company recorded $2,700,000 of additional inventory valuation charges in the prior quarter.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Excluding those charges, gross margin would have been essentially flat. Selling, general and administrative expenses were 52.7% of sales, three thirty basis points lower than the prior year, reflecting benefits from the prior year restructuring program and ongoing cost optimization activities. Operating income was $2,500,000 or 3% of sales as compared to a prior loss of $8,500,000 which included $5,500,000 of asset impairment charges and the additional inventory valuation charges previously mentioned. Diluted earnings per share were $0.22 versus a loss of $0.82 Now let me cover more details on the wholesale operations. Net sales increased $1,600,000 or 3% over the prior year, consisting of a 12.6% increase in shipments to our Bassett retail store network, partially offset by a 2.6% decrease in shipments to the open market and a 22% decrease in Lane Venture shipments.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

This was primarily related to timing of shipments for a significant customer. Gross margins increased two sixty basis points over the prior year, excluding the 1,700,000 of additional wholesale inventory valuation charges in the prior year period. Gross margins would have decreased by 70 basis points primarily due to the prior year reduction in the warranty and returns reserve from improved experience and administration in warranty and returns claims. SG and A expenses as a percentage of sales decreased 190 basis points primarily due to lower bad debt expenses coupled with the benefit of cost reductions implemented during the second half of fiscal twenty twenty four. Wholesale backlog was $18,400,000 as compared to twenty one point eight million dollars on 11/30/2024, and $19,400,000 at 06/01/2024.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Now moving on to the retail store operations. Net sales increased $3,800,000 or 7.5%. Written sales, the value of sales orders taken but not delivered declined 0.8%. Gross margin declined 50 basis points. Excluding the $500,000 of additional inventory valuation charges in the prior year period, gross margins would have decreased by 140 basis points due to lower margins for both inline and clearance goods.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

As Rob mentioned, we are more aggressive in cycling through unproductive inventory. SG and A expenses as a percentage of sales decreased five eighty basis points due to several factors, improved efficiency gains in warehouse and delivery operations, lower advertising and marketing expenditures, and overall lower operating costs. Retail backlog was $34,100,000 compared to $37,100,000 at 11/30/2024, and $31,500,000 at 06/01/2024. Our liquidity position remains solid. We generated 7,000,000 in operating $7,000,000, I should say, in operating cash flow during this quarter and ended with $59,800,000 of cash in short term investments and have no outstanding debt.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

We've reduced our projected range of annual capital investment in our business to between $7,000,000 and $9,000,000 primarily to cover remodels of existing stores, the ongoing investments in technology, including ecommerce, and the two new store openings Rob mentioned. We continue to pay our quarterly dividend and repurchase shares opportunistically. We spent $1,700,000 on dividends, dollars 400,000 on share buybacks in the second quarter. We remain committed to delivering shareholder returns through dividends and, when appropriate, share buybacks. Now we'll open up the line for questions. Olivia, please provide instructions to do so.

Operator

Our first question coming from the line of Brian Gordon with Water Tower Research. Your line is now open.

Brian Gordon
Senior Research Analyst at Water Tower Research LLC

Good morning, everyone. And congratulations on what I think has been a good quarter in very tough environment. I guess my first question is with the seven new design studio sign up, where does that put you right now in terms of the total? And and where do you think that might land by end of year?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Morning, Brian. This is Rob. That that puts us, I think, at 54 of these design studios. Boy, that's a good question in terms of the pace of this. I I I I really believe that the pace will that we just revealed will be reflective of of the ongoing pace.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So you can extrapolate from there. You know, the the really good news on this thing is that, well, one, it it's not a a steep barrier of entry for the dealer as we've said before. Also, once he makes that initial inventory of the display floor samples, you really all the inventory purchases are sold orders. It it really leverages our service capabilities and the fact that we can get these custom orders out of the factory so quickly. So his the salespeople don't have to wait on if they're paid on delivered sales, they don't have to wait on this forever because because we can get it out quickly.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So without a big inventory investment and with a lot of turn on this, we we feel really good about how this thing is going to play out over time. And, yes, we we're you know, we'd love to have more of them, but more importantly is the monitoring the success and the performance of the ones that we've opened. Because if that is if we're successful there, then you've got something that'll stand the test of time. And we do a lot of work on just gauging how these guys are doing, the ones that have opened. And that that's what is really exciting to us because it's working.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So we we it's gonna be be something that we talk about for some time. And but but that pace of six, seven, eight a quarter, I think would be is attainable and one that at least for the foreseeable future we can execute on.

Brian Gordon
Senior Research Analyst at Water Tower Research LLC

Thank you for that update. And you alluded to what I was going to ask for my follow-up. What kind of metrics can you share about how these design studios are actually maturing and and what that actually looks like over over time?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Well, you know, we obviously look at how much volume they are producing from that 1,000 square foot footprint. And so we we haven't shared that externally. And we we haven't boiled that down because, you know, you are inside someone else's furniture store, and sometimes getting the data that we can get with our own stores is is a little more difficult. But let's just say that our our dealer base is pleased with that, and we're pleased with what's happening. We we have been talking about a more granular set of metrics that we can trumpet and that we can, hopefully, attract new dealers with.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

And we're in the lab right now working on that.

Brian Gordon
Senior Research Analyst at Water Tower Research LLC

Great. Great. Thank you. If I can get in maybe one more question before turning it over. The last several markets, you've definitely been highlighting the design trade as a major initiative.

Brian Gordon
Senior Research Analyst at Water Tower Research LLC

Could you talk about how that's going? And then maybe as a quick follow-up to that, has there been any differences that you've seen since the tariffs with the design trade side of the business versus, you know, the stores and design studios and, and third party?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

You know, the we are scratching the surface on the design trade. And, you know, our focus has been on retail and on our on our dedicated distribution, our our galleries, that's the design centers, and and the and the custom studios we just talked about. And and and appropriately so, we've got capital invested in in a network and all of those things. And and I would say that we have we are somewhat late to the party on this whole migration of the business to the design trait, which according to the officials down in High Point, over 60% of the attendees now are from are designers. So this this is a big shift in in the higher end, and there's a whole section of town down there now that is is dedicated to the design trade.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So what's exciting for us is that what we do every day in the stores and on our dedicated distribution, in other words, make things one at a time and on a custom basis quickly. We do COM. We do we do a lot of things that designers use every day. So the progress is always slower than we want. I will say that the sales in that trade were up double digits for the quarter, so that's good.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

But we are doing things with our systems, with, management, and bringing on a couple new folks to get to get really noticed in this area. So stay tuned on that because we really think we can we can grow that channel. As far as the the tariffs, I I I don't I don't think the tariff has been particularly impactful to the design trades. A matter of fact, I would say less so than retail. The the the retail is so cost conscious and and such such a a tight set of operating metrics.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We don't see that as much in the design trade. The design trade needs to have one great product line and two great service and communication. That that those are kind of the basic tenets of of being successful there, but they're they're not slicing that onion down to the penny like we see in retail, is tough on the retail side. So I can't really I don't think the tariff has really impacted the design business very much.

Brian Gordon
Senior Research Analyst at Water Tower Research LLC

Okay. Thank you. That's very helpful. Best of luck with the quarter.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Thank you, sir.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Thank you.

Operator

Thank you. Our next question coming from the line of Anthony Lebiedzinski from Sidoti. Your line is now open.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

Good morning, gentlemen, and thank you for taking the questions. Great to see you guys reporting a year over year sales gain even in a tough environment. So first, just a follow-up about the shipments that you guys talked about. You had a nice increase in shipments to your Bassett stores and a decrease in the open market. I think Mike, you said that some of it was timing related to a significant customer.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

So should we see a reversal of that timing in the third quarter or how should we think about that?

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Well, let me let me just clarify the significant customer that I was referring to related to lane venture shipments only, which so so not the the rest of the open market. We just wanted to to put some color beside the fact that we had a 22% decrease in joint venture.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

Mhmm. Gotcha.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

And we we saw that as somewhat of an anomaly based on the orders we received at Land Venture in the second quarter, which were much, much better than 22% decline. So Yes. Anyway, Mike and I debated about whether we should include that because it is somewhat of but but since we have been reporting online venture and pulling that out, he went out and we did it. I get it. You know?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So the the question is, are we gonna see a correction in the open market? And it it has improved somewhat since then, since the second quarter, even though business remains very tough. And a lot a lot what what I said in my remarks, Anthony, know, the biggest real factor, not including Lane Venture in in the quarter with the open market, was the club level.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

Mhmm.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

And a lot of these guys you know, we 40% of our business in in club level is container direct. And Mhmm. The the rest, we warehouse and and, you know, they buy one at a time. And we really had to fall off in the container direct club level business in the quarter. And a lot of these guys were going, well, we're just gonna wait and see how these tariffs play out before we commit to having goods on the water that may have a you know?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

At the time, of course, I think it was 46% on April the second of of Vietnam, which, obviously, that's changed since then. But so that that that whole period there was was detrimental to the to the open market shipments. Now look. It it's it's still tough out there for the open market guys too. These independent retailers are not immune from this, and so we we have to to fight like the dickens to keep this channel growing.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

And but we we feel pretty good about where we're headed with that and better than better, hopefully, than we just showed you.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

And and, Anthony, if you remember Rob's comment on the pace during the quarter

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

Mhmm.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

You know, he he he spoke about Liberation Day and the demarcation and how April was really soft. And and I think it was was that related solely to club level, Rob?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Yeah. Primarily.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Yeah.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Yeah.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

So, you know, the the pace the pace of business in May, while not not great, was not like it was in April. And and that's kinda carried over into the third quarter.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

Right. Okay. So so so, you know, May was relatively better, so that that that's encouraging, to hear. Now in terms of the plans for discounting that you talked about a bit here. So how should we think about the impact on margins overall?

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

I mean, had a slight sequential decline from first quarter to second quarter. Will we see more of that type of a margin decline sequentially in the third quarter? Or just directionally, maybe you can help us out as to how to think about that.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Well, we've been trying to model that internally, Anthony, because we really we wanna get this inventory as clean as as we can. And so part of that sequential and we're talking about the retail gross margin now, not not the not the consolidated set. So, ultimately, that affects the consolidated, but but it's it's not it's not the wholesale gross margin. So, yeah, we we we did have a a decline, and we don't think we will see a lot more detriment to moving these goods out of some of these retail warehouses than we've seen, but it could be. You know, it's it's hard for me to get just give you a number, but I I don't think it's gonna be significant, but it it could affect it slightly.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We're running a a a clearance event right now, and we did a direct mail piece. As a matter of fact, came to my mailbox at the house last night. So we're we're running that and and but we think it's it's a prudent exercise to, you know, be clean and then have a a a good balance sheet. Yeah. Keep in mind Understood.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

You know, we're we're trying to turn inventory into cash. And Mhmm. You know, as as Rob says, clean means actually more cash on the balance sheet.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

That that makes a lot of sense, certainly. And then looking at your new store plans, so you're looking to do Cincinnati and Orlando. Beyond that, how do you guys think about the store base? Let's say two, three, five years from now. I mean, how do you guys see the store base going forward and kind of any particular markets that you would like to be in that you're not in already?

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Sure. There there there are, and we look at this a lot of ways. You know? One one, where do we have stores and where can we leverage existing investments in infrastructure and distribution and all that kind of stuff. And so that certainly is a factor.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

You know, their their their markets that I I gotta admit that are fairly bereft of opportunities for us to sell furniture except with the store or through through the design trades given that, you know, the demise of of the independent retailer, that we are seeing around the country have seen for some time of years, I'm talking about with the the high barriers of entry, the cost of real estate. So we look at we look at those markets like, okay. If we if we got an open market strategy here, who we gonna sell? And, you know, I've made a couple trips lately, and and you you go around and you go, there's not a whole lot of opportunities in some of these markets. So so we look at at that.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We also look at the the executional risk, the capital, the size company we are, the environment we're in. Right. So so we, you know, we we're conservative and and appropriately. So so I I think, you know, if if you look at two, three, four stores a year for us, that's that's a that's a pace that we can absorb. Four is a lot.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Two is not that many. So it's somewhere in between. But it's not like we're we're looking at a at a 20 store rollout or anything like that, and we and we won't be. Now in the meantime, we're trying to find the good the the guy who sells nice furniture. And there has been a huge migration to the lower end in this industry.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So there is just a ton of low end furniture being sold out there, what we call low end anyway. So the guys who sell nicer furniture are are fewer and farther between, and and our guys are making a major presentation to one of those people this morning as we speak. And so we we still you know, we we can't we can't run all over the place lickety split and do all these stores. So so these these independent dealers who sell nicer furniture are important to us. So we look at that too.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So it's kind of a Ouija board of all this stuff. And but, you know, the good thing about the design channel is you could really do that anywhere. And and there are designers out there in every market. A lot of them. Now some of them are, you know, are kinda inconsequential and work out their their dining room table, and then other ones are more substantial.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

So you kinda gotta weed through all that, but that's how we look at it. I that's kind of I hope I answered your question, but it's it's not an easy answer. But we matter of fact, we've got a board meeting next week, and and this this is this is the the big topic as we look at where we go and and how we serve each market, and it's an ongoing process.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

But, Anthony, I think I think what we're one thing we're saying, we do want to grow the number, Rob, correct me if I'm wrong here, but grow the number of stores over time. So while we're while we're saying two to three stores, I think we're saying two to three net stores.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Yeah.

Mike Daniel
Mike Daniel
SVP & CFO at Bassett Furniture Industries

Yeah.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

No. We we definitely Mhmm. We definitely wanna do that.

Anthony Lebiedzinski
Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC

Alright. Well, that all sounds great. Well, thank you very much, and best of luck.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

Thank you, Anthony, Brian, and everyone else who's been on the call. And, you know, we we announced our restructuring a year ago, and we think we've set the company on the right course to meet the challenges that we've we've already talked about with housing and consumer confidence. We really hadn't prepared for all the tariff activity ahead of the issues, and but but we're working through that on a daily basis. And and hopefully, soon, we're gonna have complete clarity on on both that issue that affects our supply chain. We are pleased with our progress in the second quarter.

Robert Spilman
Robert Spilman
President, CEO & Chairman at Bassett Furniture Industries

We're optimistic that the investments we've made in our new product lines and our emphasis on integrating Bassett further into the interior design community will provide competitive advantages through, for the future. We continue to manufacture almost 80% of our product here in The US, remain intensely focused on operating efficiencies and cost reductions to deliver for our customers and shareholders. Thank you for your interest in Bassett Furniture.

Operator

This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Executives
    • Mike Daniel
      Mike Daniel
      SVP & CFO
    • Robert Spilman
      Robert Spilman
      President, CEO & Chairman
Analysts
    • Brian Gordon
      Senior Research Analyst at Water Tower Research LLC
    • Anthony Lebiedzinski
      Senior Equity Analyst - Specialty Retail/Consumer at Sidoti & Company, LLC
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