• Consolidated Revenue: Declined 5.1% due to an additional week in the prior year; increased 2.2% on a normalized basis.
• Operating Income: Improved to $2.5 million from a loss of $2.4 million in the prior year.
• Diluted Earnings Per Share: $0.21 compared to a loss of $0.14 in the prior year.
• Wholesale Shipments: Increased 4.2% on a normalized basis.
• Retail Delivered Sales: Increased 6.8% through company-owned stores on a normalized basis.
• Gross Margin: Increased by 170 basis points, with a 250 basis point increase in the wholesale segment.
• SG&A Expenses: 54% of sales, down 400 basis points from the prior year.
• Retail Written Sales: Increased 5.4% on a normalized basis.
• E-commerce Sales: Increased 36% in Q1.
• Cash and Short-term Investments: $56.4 million with no outstanding debt.
• Dividends and Share Buybacks: $1.7 million spent on dividends and $721,000 on share buybacks in Q1.

• Warning! GuruFocus has detected 7 Warning Sign with BSET.

Release Date: April 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bassett Furniture Industries Inc (NASDAQ:BSET) reported a $4.8 million improvement in operating profits due to streamlined cost structures and higher operating efficiency.
• On a normalized basis, sales revenue for the first quarter increased by 2.2%, with strong performance in December and January.
• E-commerce sales saw a significant increase of 36%, driven by investments in the company's omnichannel model and improved conversion rates.
• The company achieved a 170 basis point increase in gross margins, primarily due to better margins in the wholesale segment.
• Bassett Furniture Industries Inc (NASDAQ:BSET) maintained a strong liquidity position with $56.4 million in cash and short-term investments and no outstanding debt.

Negative Points

• Consolidated sales were down by 5.1% for the first quarter, largely due to the comparison of 13 weeks this year to last year's fiscal 14 weeks.
• Wholesale orders decreased by 8.4% for the quarter, or 1.4% on a normalized basis, with February being the slowest month.
• Retail gross margins fell modestly, despite cost reductions from the retail warehouse consolidation program.
• The company faces challenges from tariffs, which could impact pricing structures and consumer demand for home furnishings.
• Consumer confidence has been dropping, which could negatively affect future sales trends.

Q & A Highlights

Q: Have you seen any meaningful change in business trends since the end of the quarter, especially with the drop in consumer confidence? A: Robert Spilman, CEO: After the election, we saw a spike in sales, particularly during Black Friday, December, and January. However, as the year progressed, business has returned to last year's pace. Year-over-year, we're trending similarly to the previous year, with a notable bump post-election.

Q: Can you comment on the health of your inventory and whether you brought in additional inventory to get ahead of tariffs? A: Robert Spilman, CEO: We didn't consciously bring in extra inventory for tariffs. The increase was primarily due to anticipation of the spring season for collections like Copenhagen and Andorra. Given recent tariff announcements, we're glad we did.

Q: What are your initial thoughts on the tariff announcement, and is it feasible to manufacture imported products in the US? A: Robert Spilman, CEO: Manufacturing imported products in the US is not feasible for us. However, with 79% of our products made domestically, we have flexibility. We will study the tariff effects and may emphasize domestic products more prominently.

Q: How sustainable are the current gross margins, especially with the majority of production being domestic? A: Robert Spilman, CEO: These are some of the highest gross margins we've achieved. While I don't see them increasing in the short term, we aim to keep retail inventory lean. The recent tariff changes are a wildcard, and we may need to adjust prices.

Q: What are your plans for new store openings and the expansion of design studios? A: Robert Spilman, CEO: We see significant growth potential for our design studios and plan to push this program hard. We are also in the process of signing leases for two new stores, expected to open late this year or early next year, in new markets for us.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.