Bassett Furniture Industries NASDAQ: BSET reported higher third-quarter revenue and operating profit as gains in its retail and wholesale businesses, expense controls and tariff refunds more than offset continued pressure from a cautious consumer and a slow housing market.
For the fiscal third quarter ended Aug. 29, 2026, consolidated revenue increased 3.4% year over year to $82.8 million. Operating income rose to $2.8 million, or 3.4% of sales, from $593,000, or 0.7% of sales, a year earlier. Diluted earnings per share were $0.24, compared with $0.09 in the prior-year quarter.
“We are pleased to report a 3.4% increase in consolidated revenue, bolstered by increases in both retail and wholesale sales,” Chairman and CEO Rob Spilman said. He said all product categories posted positive results, led by domestic upholstery.
Retail and wholesale sales improved
Retail sales at company-owned stores rose $2.3 million, or 4.5%, from the prior-year quarter to $54.2 million. Written retail sales, which represent orders taken but not yet delivered, increased 4.4%. Spilman said the result extended momentum from the second quarter despite the timing of the Labor Day promotion, which had one fewer week in the quarter than it did a year ago.
The full four-week Labor Day promotion, which extended into the current quarter, generated a 9% increase in written sales and improved written gross margins, according to management. During the question-and-answer session, Spilman said all regions posted higher sales during the promotion.
Wholesale sales to external customers increased $400,000, or 1.4%. Total wholesale net sales, including sales to Bassett’s retail store network, rose 5.7% to $53.7 million. The increase included a 7.5% rise in shipments to Bassett’s retail store network, a 28% increase in Lane Venture shipments to wholesale customers and a 3.7% increase in shipments to the open market.
Lane Venture shipments increased 44% overall, aided by the introduction of the outdoor brand into Bassett Home Furnishings stores earlier in fiscal 2026. Spilman said wholesale written orders rose 7.9%, led by double-digit gains in domestic upholstery and the Lane Venture outdoor division. Dedicated dealer concepts recorded essentially flat shipments during the quarter, while orders increased 4.2%.
Management said pricing contributed to sales growth, while unit volumes were slightly lower. Chief Financial Officer Mike Daniel said wholesale unit sales declined by a low-single-digit percentage, while unit prices rose by less than double digits. He characterized retail trends as similar.
Tariff refunds and cost controls lifted profit
Consolidated gross margin rose 130 basis points from the prior year to 57.5%. Daniel said the improvement was primarily driven by $1 million in tariff-refund income recognized in gross profit during the quarter, along with a higher mix of retail sales and improved wholesale margins.
The company received $2.8 million in refunds from U.S. Customs and Border Protection following a February 2026 U.S. Supreme Court decision invalidating IEEPA tariffs imposed in 2025. Bassett expects to record the remaining refund amounts primarily in the fourth quarter as inventory containing tariff costs is sold.
Daniel said higher tariff costs recognized during the quarter were substantially offset by the refund income. Bassett imports less than 25% of its products, management said.
Retail gross margin declined 90 basis points to 51.5%, largely reflecting lower margins on in-line goods amid increased promotional activity. Spilman said pricing strategies implemented in July have begun improving written margins, and he expects the effect to begin appearing in reported results during the fourth quarter.
Selling, general and administrative expenses, excluding Orlando store pre-opening costs, were 53.9% of sales, down 150 basis points year over year. The company attributed the decline to greater fixed-cost leverage from higher retail sales and lower corporate expenses. Daniel said Bassett has essentially realized the quarterly impact of its planned $1.5 million to $2 million annual expense-run-rate reduction.
The company incurred $144,000 of pre-opening expenses for its Orlando store, which opened the day after the earnings call. Daniel said new-store pre-opening costs typically range from $200,000 to $400,000, depending on the location and timing of the opening.
Digital, store expansion and product initiatives
Spilman said the company’s digital investments and marketing efforts supported e-commerce growth. E-commerce written sales rose 48%, while website-delivered sales increased more than 42%. Average web order value increased 33%, driven by stationary and motion upholstery categories.
Bassett’s new Orlando store brings its corporate retail store count to 60. The company expects to open two stores in fiscal 2027, though Daniel said one will be a repositioning involving a closure and opening, for a net increase of one store.
The company also plans to debut a 44,000-square-foot showroom at the High Point Market on Oct. 15. At the event, Bassett plans to introduce a whole-home collection developed with Birmingham-based interior decorator and textile designer Heather Chadduck. The collection includes 30 furniture pieces, five finishes and 70 in-line fabrics, with retail availability expected next spring.
Bassett’s hospitality division, which has operated for about nine months, has received several orders, though Spilman said the effort will take time to gain traction in the hospitality market.
Cash position and outlook
The company ended the quarter with $53.4 million in cash and short-term investments and generated $6.1 million of operating cash flow. Capital expenditures totaled $4.3 million, primarily for the Orlando store and High Point showroom build-out. Bassett now expects fiscal 2026 capital expenditures of $9 million to $11 million, compared with its prior outlook of $10 million to $12 million.
Bassett paid $1.7 million in dividends and spent $126,000 on share repurchases during the quarter. Spilman said the company evaluates its dividend each quarter and views it as an important component of shareholder returns, while continuing to assess growth investments based on expected returns.
Management said housing conditions, elevated mortgage rates and inflation remain concerns. Spilman described consumers as cautious, noting that larger-ticket and project-related business remained strong but that customers may take longer to complete purchases. “There is a lot of uncertainty out there right now,” he said.
About Bassett Furniture Industries (NASDAQ:BSET)
Bassett Furniture Industries, Incorporated is a home furnishings company headquartered in Bassett, Virginia. Founded in 1902, the company built its heritage in wooden furniture and has expanded into a broader range of residential furnishings.
Bassett designs, manufactures, sources and sells products including upholstered furniture, bedroom and dining furniture, occasional tables, home office furnishings, mattresses, rugs, lighting and decorative accessories. Its offerings are marketed under the Bassett brand, with an emphasis on coordinated room collections, customization and design services.
The company serves consumers primarily in the United States through company-owned and licensed Bassett Home Furnishings stores, its website and other retail channels.
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