Bassett Q2 EPS beats estimates as sales decline slightly
Bassett Furniture Industries reported a 6.3% increase in Q2 net income to $2.04 million, with diluted EPS rising to $0.24, beating analyst estimates. While revenues decreased slightly to $83.8 million, gross margins improved by 90 basis points to 56.5%, driven by wholesale performance. The company generated $7.4 million in operating cash flow and noted improvements in written sales and e-commerce.
*this image is generated using AI for illustrative purposes only.
Bassett Furniture Industries reported net income of $2.04 million for the second quarter ended May 30, 2026, a 6.3% increase from the prior year. Diluted earnings per share rose to $0.24, beating the analyst consensus estimate of $0.20 by 20%. The company generated $7.4 million of cash from operating activities during the quarter.
Revenues decreased 0.7% to $83.8 million from $84.3 million in the prior year quarter, though this figure beat the analyst consensus estimate of $83.300 million by 0.54%. Operating income was $2.2 million, or 2.7% of sales, compared to $2.5 million, or 3.0% of sales, in the prior year. The prior year's operating income included a $0.7 million gain from insurance proceeds for a business interruption claim related to a cyber incident. Excluding that gain, operating income for the prior year would have been $1.8 million, or 2.1% of sales.
Gross margin improved to 56.5%, a 90-basis point increase from the prior year, driven primarily by higher margins in the wholesale business. This was partially offset by lower margins in the retail business. Selling, general and administrative expenses excluding new store preopening costs were 53.3% of sales, 60 basis points higher than the prior year. On an adjusted basis, excluding the cyber claim proceeds, SG&A expenses as a percentage of sales improved by 20 basis points.
Financial Performance
| Metric | Q2 FY26 | Q2 FY25 | Change |
|---|---|---|---|
| Net Sales ($ millions) | $83.8 | $84.3 | -0.7% |
| Operating Income ($ millions) | $2.2 | $2.5 | -12.0% |
| Net Income ($ millions) | $2.04 | $1.92 | 6.3% |
| Diluted EPS ($) | $0.24 | $0.22 | 9.1% |
| Gross Margin (%) | 56.5% | 55.6% | 90 bps |
Segment Performance
Wholesale sales decreased 2.0% to $53.1 million from $54.2 million, while operating income for the segment was $8.2 million. Retail sales increased 2.4% to $55.5 million from $54.2 million, with operating income of $0.1 million. Corporate and Other expenses were $6.1 million, compared to $6.5 million in the prior year.
Rob Spilman, Chairman and CEO, stated that operating profit on an adjusted basis improved despite slightly lower consolidated revenue. He noted that total written sales were up 9.5% and wholesale orders rose 5.2% for the second quarter. E-commerce written sales rose 40%, with the average order value increasing 24%.
The company began realizing savings from a plan to reduce annual expenses by $1.5 million to $2 million, which will be fully realized by fiscal year end. Bassett will hold a conference call to discuss quarterly results on July 2, 2026.
Can the 40% surge in e-commerce written sales be sustained throughout the remainder of the fiscal year?
What specific strategies are being implemented to address the margin compression in the retail segment?
How will the company utilize the $7.4 million in generated operating cash flow regarding future capital allocation?
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