Bassett Furniture Indus Reports Q2 2026 Results: Full Earnings Call Transcript

Bassett Furniture Indus (NASDAQ: BSET ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. 2% in Q2 2026.

Consolidated gross margins grew by 90 basis points, driven by better wholesale margins, though retail margins fell due to aggressive clearance strategies. Plans to increase retail gross margins by 200-250 basis points in mid-July were announced. Notable strategic initiatives include expanding retail locations with new store openings in Cincinnati and Orlando, enhancing e-commerce with a 40% increase in written web sales, and integrating AI for personalized marketing. 5 to $2 million annual savings, and increasing sales per store to leverage fixed costs.

9 million in cash and short-term investments, and plans for $10 to $12 million in capital expenditures for 2026. Full Transcript OPERATOR Good day and thank you for standing by. Welcome to the Bassett Furniture Industries Q2 2026 earnings conference 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 this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Daniels, CFO. Sir, please go ahead. Mike Daniel, Senior Vice President And Chief Financial Officer Thank you, Michelle, for the introduction.

Welcome to Bassett Furniture Industries earnings call for the second quarter of fiscal 2026, which ended May 30. Joining me today is our Chairman and CEO, Rob Spillman. We issued our news release and Form 10-Q yesterday after the market closed and it's available on our website. After today's remarks, Rob and I will open up for questions.

We will also post a transcript of this call on Bassett's investor relations website following the call. 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. 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'll turn things over to Rob. Rob. Rob Spillman, Chairman and CEO All right, thank you, Mike, and good morning, everyone.

I'll start with some insights on the second quarter and Mike will get into more of the financial details. I'll also discuss our strategic initiatives to drive further growth at Bassett. Operating profit on an adjusted basis improved in the second quarter on slightly lower consolidated revenue. 5%.

Our Memorial Day promotion was especially strong with written sales up 14% and 4% more traffic than last year. We saw these trends continue into June, which is a good start for the third quarter. 2% for the second quarter, but shipments were down 2% as the increase in written sales were back-end loaded. 4 million of cash from operations during the period.

Our consolidated gross margins grew by 90 basis points for the quarter, primarily due to improvements in wholesale margins on slightly lower revenue. Despite significant cost cutting in recent quarters, our SGA has remained stubbornly high. Part of this is the higher percentage of overall sales that corporate retail represents, with a structurally higher amount of SGA compared to the traditional wholesale model. And we did have some unforeseen expenses run through, such as fuel surcharges that stemmed from the Iranian conflict.

In any event, we are committed to improving our operating margins and our SGA percentage is a major part of the picture. 5 to $2 million on an annual basis. Although we have seen recent forecasts foretelling modestly better housing numbers in the second half of 2026, we must generate higher sales in our existing store network. In the environment in which we operate today, we are not simply waiting on things to get better.

Obviously, higher average sales per store means greater leverage of our fixed costs. 5% written sales increase was particularly encouraging. That said, our retail gross margins fell by 120 basis points in the quarter, partially due to more aggressive pricing of our clearance inventory. Accordingly, we plan to raise retail gross margins in mid-July by 200 to 250 basis points.

Our marketing organization has begun to consistently deliver greater efficiency on investment as our adjusted media mix drove more foot traffic to our stores for the first time since the COVID boom. We engaged a new agency last year and their analytics platform is giving us better understanding of our customer. We have also begun to use artificial intelligence to further re