Bassett Furniture Industries Q3 2026 Earnings Results & Report

Bassett Furniture Industries EPS Results

• Actual EPS: $0.24
• Consensus EPS: $0.13
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A
• EPS Beat Rate: 5 of last 8 quarters

Bassett Furniture Industries Revenue Results

• Actual Revenue: $82.84 million
• Expected Revenue: $82.77 million
• Beat/Miss: Beat by +$64.00 thousand
• YoY Revenue Growth: N/A

Bassett Furniture Industries (NASDAQ:BSET) is a home furnishings company headquartered in Bassett, Virginia. Founded in 1902, the company designs, manufactures, sources and markets furniture and related products for residential customers.

Bassett’s product offerings include upholstered furniture, bedroom and dining furniture, occasional tables, home office products, mattresses, outdoor furniture and home accessories. The company is known for customizable furniture programs that allow customers to select upholstery fabrics, finishes and configurations.

The company sells its products through a network of Bassett Home Furnishings retail stores, its e-commerce operations and independent furniture retailers. Bassett primarily serves customers in the United States, with its retail and wholesale activities supported by domestic and international sourcing and manufacturing relationships.

Bassett Furniture Industries Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Improved third-quarter results: Revenue rose 3.4% to $82.8 million, operating income increased to $2.8 million from $593,000, and diluted EPS improved to $0.24 from $0.09. Gross margin expanded 130 basis points, aided by better wholesale margins and $1 million of tariff-refund income.
• Positive Sentiment: Sales momentum continued: Company-owned retail written sales grew 4.4%, wholesale written orders increased 7.9%, and the full four-week Labor Day promotion generated a 9% increase with improved written margins. E-commerce written sales surged 48%, while website-delivered sales rose more than 42%.
• Positive Sentiment: Expense control and liquidity remain strengths: SG&A excluding Orlando pre-opening costs declined 150 basis points as a percentage of sales, and management remains on track for an additional $1.5 million to $2 million reduction in annualized expenses. Bassett ended the quarter with $53.4 million in cash and short-term investments and lowered its 2026 capital-expenditure outlook to $9 million–$11 million.
• Negative Sentiment: Demand remains constrained: Management described consumers as cautious, with customers taking longer to commit despite strong project and higher-ticket business. Weak housing activity, elevated mortgage rates, inflation, and broader economic uncertainty continue to weigh on the outlook.
• Neutral Sentiment: Store expansion will be measured: Orlando opens tomorrow, but management expects only two store openings in fiscal 2027—one of which is a relocation, resulting in just one net new store. Bassett is also preparing a new High Point showroom and plans to launch its Heather Chadduck collection in stores next spring.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Bassett Furniture Industries Q3 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised.

[Operator]

To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mike Daniel, Chief Financial Officer. Please go ahead.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Thank you, Latonya, for the introduction. Welcome to the Bassett Furniture Industries earnings call for the third quarter of fiscal 2026, which ended August 29, 2026. Joining me today is our Chairman and CEO, Rob Spilman. We issued our news release and Form 10-Q yesterday after the market closed, and they are available on our website. After today's remarks, Rob and I will be open for questions. We will also post a transcript of this call on Bassett's investor relations website following the call.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

During this call, certain statements we make may be considered forward-looking statements 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.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. Other filings with the SEC describing risks related to our business are available on our corporate website under the Investors tab. Now I will turn things over to Rob. Rob?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Thank you, Mike. Good morning, everyone. We are pleased to report a 3.4% increase in consolidated revenue, bolstered by increases in both retail and wholesale sales. All product categories were positive, with domestic upholstery leading the way. Written retail sales from company-owned stores increased 4.4%, continuing the momentum from the second quarter in spite of one less week of the Labor Day promotion in the quarter compared to last year.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Wholesale written orders were up 7.9%, led by double-digit gains in domestic upholstery and the Lane Venture outdoor division. Operating profits showed nice improvements, thanks to sales increases in key product categories, improved expense control, and tariff refunds that offset tariff costs that were embedded in our balance sheet. It is important to note that Bassett imports less than 25% of our products. Therefore, refunds are much lower for us than for others.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Mike will give you more color on the net impact of tariff refunds in his financial review. Consolidated gross margins grew by 130 basis points, primarily due to improved wholesale margins and, to a lesser extent, tariff refunds. While retail gross profit fell by 80 basis points, we are encouraged by the gross margin improvement that we have seen since the pricing strategies that we implemented in July have started to take effect.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

The full four-week Labor Day promotion that spilled into the current quarter generated a 9% written sales increase with improved written gross margins. We have made progress on reducing operating expenses, which remains a key goal for our management team. SG&A, excluding pre-opening costs for the Orlando store, was 150 basis points lower than last year's third quarter.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

We are on track to meet our goal of reducing the annual run rate of expenses by an additional $1.5 million-$2 million. I am pleased with the gains we have made on our strategic initiatives, especially those to grow sales from new and existing stores. Our marketing team's ability to optimize and refine the media mix continues to produce positive outcomes. We had excellent response to our 84-page fall catalog, which featured curated room layouts and styling tips along with new collections.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

We have improved the visual presentation of our products on the website, helping consumers on their path to fully experience the Bassett brand. These efforts are paying off with e-commerce written sales up 48% this quarter and website-delivered sales rising more than 42%. Average order value on the web was up 33%, which was propelled by stationary and motion upholstery categories.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Our technology investments during the past two years continue to enhance the website presentation and navigation, benefiting the user experience and driving the sales results that I just mentioned. Once again, our domestic custom furniture products drove the majority of our written wholesale sales gain. Custom upholstery and custom motion upholstery in particular was very strong. Also on the domestic front, our BenchMade dining program had a nice quarter.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Once again, Lane Venture performed very well. Our product team continues to seek new expressions of comfort and innovation to add to the assortment. We are extremely excited about the debut of our new 44,000 sq ft showroom at the High Point Market on October 15th. We are in a new location designed to provide greater traffic and visibility while inspiring customers with a broad range of new products.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Our teams have worked hard to enhance the styling and appeal of the Bassett brand, which is embodied in the new showroom presentation. We recently announced our partnership with Birmingham-based interior decorator and textile designer, Heather Chadduck. Heather is highly respected for her portfolio of design projects and for her successful line of textiles.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

The highlight of our events in High Point will be the launch of a major new collection on which Heather collaborated with our internal team. The whole home collection features 30 furniture pieces with five finishes and 70 in-line fabrics that she has personally curated. Heather says the collection feels timeless but very organic and fresh.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

The Heather Chadduck collection for Bassett will be in retail stores next spring. Our priority remains growth from existing and new stores, and we are happy to add another location, bringing our corporate retail store total to 60.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Tomorrow, we are opening a new store in Orlando, which has a similar footprint to the 14,000 sq ft store we opened in May in Cincinnati. These are important markets and position us in quality real estate, catering to our targeted demographic profile. We rely on our two dedicated distribution concepts, Bassett Design Centers and Bassett Custom Studios, for growth in the open market.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Our 94 design centers and 64 custom studios currently represent over half of our wholesale business outside of the Bassett store network. With the low end of the market dominating so much of furniture retail in U.S. mid-size towns, we view our dedicated dealer network as our local showcase of well-crafted custom home furnishings. Our executive team has been traveling to these Bassett partner locations this summer with the goal of strengthening our collaboration with the dedicated network.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

We have been gathering input to formulate enhancements to the concepts for 2027 and beyond. For the quarter, shipments to our dedicated concepts were essentially flat, while orders increased by 4.2%. The natural extension of our wholesale outreach is our Bassett Hospitality division, now operating for about nine months. We have had several orders but acknowledge that this effort will take time while we are gaining a foothold in the hospitality segment.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

All in all, we were pleased with our third quarter trajectory. Housing remains slow, and mortgage rates are in lockstep with the Federal Reserve's recent rate increases. The ongoing effect of high inflation rates on the U.S. consumer continues to be a major concern. That said, we remain optimistic about managing through these challenges. Now, I will turn things over to Mike.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Thank you, Rob. In my commentary, the comparisons I will discuss will be the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, unless otherwise noted. Let me start by discussing the $2.8 million in tariff refunds that we received from U.S. Customs and Border Protection as a result of the U.S. Supreme Court's February 2026 decision invalidating the IEEPA tariffs imposed by the President in 2025.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Of this amount, $1 million was recorded as an increase in gross profit for this quarter, with additional amounts to be recorded primarily in the fourth quarter of 2026. Tariff costs are capitalized into inventory at the time they are incurred and subsequently recognized in the income statement when those goods are sold to a third party. The high tariff costs recognized in the quarter were substantially offset by the tariff refund income that we recorded.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

As Rob pointed out, we import less than 25% of our products. Total consolidated revenue was $82.8 million, an increase of $2.7 million or 3.4%. This consisted of a $2.3 million or 4.5% increase in retail sales from our corporate-owned stores and a $400,000 or 1.4% increase in sales to external wholesale customers.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Gross margin of 57.5% represented a 130 basis point increase when compared to the prior year, primarily driven by the previously discussed tariff refund and partially offset by lower margins in the retail business. The margin increase was also due to a higher mix of retail sales, which carry a higher gross margin than third-party wholesale sales. Selling, general, and administrative expenses, excluding new store pre-opening costs, was 53.9% of sales, 150 basis points lower than the prior year.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

This decrease was driven primarily by increased leverage of fixed cost on higher sales in our retail segment, coupled with lower corporate expenses. Operating income was $2.8 million, or 3.4% of sales, as compared to income of $593,000, or 0.7% of sales in the prior period. Diluted earnings per share were $0.24 versus $0.09 last year. I'll now cover more details on our wholesale operations.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Net sales were $53.7 million, up 5.7% compared to last year. This increase consisted of a 7.5% rise in shipments to the retail store network, a 28% increase in Lane Venture shipments to wholesale customers, and 3.7% more shipments to the open market.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

As previously discussed, we introduced Lane Venture Outdoor brand in the Bassett Home Furnishings store during the first quarter of 2026 and have included those shipments to the store network in the 7.5% increase for the retail stores.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

In total, shipments of Lane Venture were up 44%. Gross margins rose 150 basis points, primarily due to the previously discussed IEEPA tariff refund, along with improved margins in both the domestic wood and the Lane Venture operations. The increase was partially offset by lower margins in the imported wood and upholstery, which carried tariff costs.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

SG&A expenses as a percentage of sales were flat, as the effects of greater leverage of fixed costs from higher sales were offset by greater outbound freight expenses, primarily driven by higher fuel costs. Now moving on to our retail store operations. Net sales of $54.2 million represented a $2.3 million, or 4.5% increase over the prior year.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Written sales, the value of sales orders taken but not delivered, increased 4.4%. Gross margin at 51.5% is a decline of 90 basis points, primarily due to lower margins on in-line goods from increased promotional activity. Total SG&A expenses, excluding new store pre-opening costs as a percentage of sales, decreased 130 basis points due to greater leverage of fixed costs from higher sales levels and lower advertising and marketing costs, partially offset by higher employee costs.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

During the quarter, we incurred $144,000 of new store pre-opening costs associated with our Orlando location opening tomorrow. Before opening a new store, we incur such expenses as rent, framing costs, and other payroll-related costs. These costs generally range between $200,000 and $400,000 per store, depending on the location and the period of time between when we take physical possession of the store space and the opening.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Now I will cover our liquidity position, which remains strong with $53.4 million of cash and short-term investments. During the quarter, we generated $6.1 million of operating cash flow. We also spent $4.3 million on capital expenditures, which was significantly higher than the recent run rate. This increased spending was primarily related to the Orlando store that opens tomorrow and the build-out of our new showroom in High Point.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

We expect capital expenditures in the fourth quarter to be between $2 million and $4 million, and updating our full capital expectations for 2026 to range between $9 million-$11 million, versus our prior forecast of $10 million-$12 million. We continue to pay our quarterly dividend and repurchase shares opportunistically, I should say. We spent $1.7 million on dividends and $126,000 on share buybacks in the quarter.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

We remain committed to delivering shareholder returns through dividends and, when appropriate, share buybacks. Now we'll open up the line for questions. Latanya, please provide instructions on how to do so.

[Operator]

Sure. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Anthony Lebiedzinski of Sidoti. Your line is open, Anthony.

[Anthony Lebiedzinski, Analyst at Sidoti]

Thank you very much, and good morning, everyone, and certainly nice job improving the top and bottom line in the quarter. As we look at the reported revenue, can you give us just a rough idea as far as the impact of pricing versus unit volumes that you saw in the quarter?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Mike's digging that out right now, Anthony. You asked that last quarter-

[Anthony Lebiedzinski, Analyst at Sidoti]

Thanks.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

... as well.

[Anthony Lebiedzinski, Analyst at Sidoti]

Yeah. Well, just as we think about all the noise with the-

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

No, that's a good question given what's-

[Anthony Lebiedzinski, Analyst at Sidoti]

Yeah.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

That's a good question given what's going on in the world today.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Yeah. Here we go. So yes, on the wholesale side, units were down slightly. I won't give you the exact percent, but it was low single digits. Unit price was up, I would say up in the less than double-digit range.

[Anthony Lebiedzinski, Analyst at Sidoti]

Got you. Okay. That's very helpful.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

That's on the wholesale side. On the retail side, pretty similar. Let's just leave it at that.

[Anthony Lebiedzinski, Analyst at Sidoti]

Okay. Fair enough. Okay. Got you. Then certainly, it was encouraging to hear that you guys did very well during your Labor Day promotion with your written sales. Just curious, did you see any notable regional differences throughout the country, or was it more or less consistent?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

No, it's pretty consistent. All the regions were up.

[Anthony Lebiedzinski, Analyst at Sidoti]

That's good to hear. Okay. Earlier this year, you guys opened a new store and acquired another dealer store, and you're about to open a new store in Orlando tomorrow. So as we look forward, how do we think about the additional store locations in FY 2027 and beyond? Just what's the latest thinking on that?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

We'll open two stores next year, Anthony. Honestly, beyond that, we do not have one in the queue. We are looking at upgrading existing locations as part of our consideration on future capital expenses. But at the moment, we have two for FY 2027.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Anthony, let me just add, one of those is a reposition. So there will be a closure and an opening. So it is net up one.

[Anthony Lebiedzinski, Analyst at Sidoti]

Got you. Okay. Thanks for that. Okay. My last question before I pass it on to others. So, as it relates to your comment about being more aggressive with Black Friday promotions, can you provide more details as to what your plans are? How do we think about the impact that may have on margins?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

I don't think it's going to have a big impact on the margins, Anthony. It's just Black Friday has, for us, grown into such a big event and closes the year, that we just want to make sure that we end the year with a bang. But I don't anticipate an acceptable diminution of margin as a result.

[Anthony Lebiedzinski, Analyst at Sidoti]

That's good to hear. All right. Well, thank you very much, Rob and Mike.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Thank you.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Thank you, Anthony.

[Operator]

Our next question will be coming from the line of Linda Bolton Weiser of Water Tower Research. Your line is open, Linda.

[Linda Bolton Weiser, Analyst at Water Tower Research]

Yes. Hi, thank you. I just wanted to ask about your retail sales growth in the quarter was pretty good. You have had a couple of quarters here of pretty decent growth. However, the growth is not as strong as what you saw in FY 2025. Just stepping back in terms of the larger picture, I am wondering, how would you characterize consumer behavior right now?

[Linda Bolton Weiser, Analyst at Water Tower Research]

Are they still buying to replace things that they bought during the pandemic, and here it is six years later, and they want to buy something new? If so, what do you think is making the slower growth? Is it just the concern from the war in the Middle East? What general impact do you think the higher mortgage rates, interest rates will have on your business going forward? Do you think it will slow it even further? Thank you.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Well, Linda, this is Rob. We have not met yet. Look forward to meeting you. Look, there is a lot of facets to the answer to your question. I would say that for us, we feel the consumer remains cautious. We have nice interest and project business, which drives an appreciable part of our business.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

The bigger-ticket business was very good in the quarter. I do feel that folks are taking longer to pull the trigger. We are doing the work, and they may not always pull the trigger. So it is not what I would characterize as an easy environment at the moment for us. I would say yes. Just the momentum, and this is not unique to us by any means, and you can certainly read about it, and you know about it. Just the general malaise in the housing sector.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

We were looking for more of an uptick nationally than we have experienced this year, and it has not materialized in that regard. Certainly, if you raise mortgage rates further than they were, that is not providing a tailwind in that regard. So I think our guys did a nice job of closing the business that came through the door. Again, our project business, has been strong. But cautious, conservative, and you can understand why. There is a lot of uncertainty out there right now.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Linda, I would add to what Rob said. If you look at the pace of business over the course of the year, and you look back at our first quarter, our first quarter was pretty slow. I think we were up 9.5% written in Q2, and we did see a nice pickup in the May timeframe, and we had a very successful Memorial Day event. The other thing I would say is if you look at our quarter, you have to remember at least Labor Day last year was basically two days after the quarter end last year compared to this year, which was a week and two days after quarter end.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

So there's a week time shift in that promotion, and that's why Rob pointed out that for the four-week promotion, we were actually up 9%, but it doesn't show at least in the pace of business for the quarter because a big chunk of that ends up in the fourth quarter.

[Linda Bolton Weiser, Analyst at Water Tower Research]

Okay. Thank you. That's very helpful color. Turning to margins. Your gross margin was up nicely, and I think it was up even if you want to strip out that positive refund effect. So it was up year-over-year. Do you think with more effect from the retail price increase in the fourth quarter that the gross margin can be up even more year-over-year? Let's say excluding the tariff refund. Do you think that could be the case in the fourth quarter?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Well, we are still in the first month of the fourth quarter, Linda. It ends tomorrow. We haven't seen the retail gross margin strategy on a piece of paper yet, on a P&L. But the written margins are looking better for the month of September at retail. We are very hopeful that that's going to materialize. We think it will.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

That is something that will help us in the fourth quarter. I don't expect to see a lot of difference in the wholesale margin. We do have that going for us. It's hard to quantify at this moment because we instituted a new pricing strategy in mid-July, and those deliveries will be showing through on the P&L here this month, or begin to show this month.

[Linda Bolton Weiser, Analyst at Water Tower Research]

Okay. Thank you. I'm just curious on the SG&A expense. It was up slightly in dollar terms, both year-over-year and sequentially from the second quarter. I'm just wondering, your $1.5 million-$2 million of savings, is that primarily reflected in SG&A or not? Did we see any of that in the quarter, or are we going to see more of a positive effect of that in the fourth quarter? Thank you.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Yes. During the quarter, we essentially did realize all of the quarterly effect of that $1.5 million-$2 million. But when you look at the SG&A by itself, you got to remember, more of our sales, consolidated sales, came from retail, which carries more SG&A expense. I think as you're analyzing that SG&A, that's kind of the big difference.

[Linda Bolton Weiser, Analyst at Water Tower Research]

Okay. Okay, that's helpful. Thank you. I noticed that your inventory reduction was very good in the quarter, and it did boost your operating cash flow. Which was quite strong, even excluding that tariff refund. What is going on there? Why did the inventory come down so much? Can we expect more inventory reduction in the fourth quarter?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Well, do you want to talk about the tariff?

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

Well, keep in mind, there is a chunk in inventory related to the tariff that is going to be coming through on the P&L this quarter. But ex that, we still had nice reduction in inventory, primarily around, frankly, imported product.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Our Club Level motion product inventory came down nicely, and we have been working on that. Also, we are doing less of the cut-and-sew fabric, where we bring the kits in from offshore. Still important to us, but our consumers are gravitating more and more to the special order, and that is cut and sewn domestically, so we do not have the carrying cost of the pre-sewn kits. So we are certainly working hard to continue reductions. But I do not think you are going to see something in this next quarter as dramatic as you just saw this quarter.

[Linda Bolton Weiser, Analyst at Water Tower Research]

Okay. Sounds good. My last question just has to do with sort of your capital allocation policy. Your cash dividends per year are nearly $7 million. In most of the recent years, you have been using balance sheet cash to pay the dividend. I am not sure how it is going to turn out this year, but it looks like that might be the case again for FY 2026, that you will use balance sheet cash to pay at least part of it. Have you considered reducing the dividend just to be able to invest more behind growth initiatives in your business?

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

We consider the dividend every quarter. We think it is a very important part of what we do. We think our cash balance is appropriate and strong. Yes, every quarter, we discuss capital allocations for whether it be growth or return to shareholders. But I think Bassett has a history of returning dividend to shareholders, and I don't think we are anywhere near a situation where we would feel like we are under pressure on the dividend.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Frankly, we need to vet any kind of capital expenses based on the returns that we receive from those, and so we are pretty conservative about that. Yes, we certainly look at all these things as we should and as appropriate. Obviously, we would strive to pay the dividend out of operating cash flow, and we haven't done it every year, but we have done it a lot of years. So that is our objective, but we do view the dividend as an important part of the picture so long as the board feels the same way.

[Mike Daniel, SVP and CFO at Bassett Furniture Industries]

One thing I would add to that, Linda, is keep in mind that the fourth quarter is our best cash generation quarter. So as you look at it right now, certainly get that kind of the conclusion you just did for the year, but hopefully the cash will come through as we expect for the fourth quarter.

[Linda Bolton Weiser, Analyst at Water Tower Research]

Great. That sounds good. Thank you very much for taking my questions.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Thank you, Linda.

[Operator]

Thank you. I'm showing no further questions. I would now like to turn the call to Rob Spilman, Chairman and CEO, for closing remarks.

[Rob Spilman, Chairman and CEO at Bassett Furniture Industries]

Okay. Thank you very much. We look forward to seeing some of you soon in our new showroom in High Point, and we look forward to touring you around this space. We're very excited about it. I'll close by just saying thank you for your interest in Bassett Furniture and for your support of our business. Good day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Mike Daniel, SVP and CFO
• Rob Spilman, Chairman and CEO

Analysts

• Anthony Lebiedzinski, Analyst at Sidoti
• Linda Bolton Weiser, Analyst at Water Tower Research