Bassett Furniture Industries, Incorporated

Good day and thank you for standing by. Welcome to the Bassett Furniture Industry's first quarter 2025 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'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today, Drew Ingram, Vice President and Controller. Please go ahead.

Thank you, Kevin, for the introduction. Welcome to Bassett Furniture's earnings call for the first quarter ending March 1st, 2025. I'm Drew Ingram, Bassett's controller. I am sitting in this morning for our CFO, Mike Daniel, who is out for an unexpected event in his immediate family. Please keep Mike and his family in your thoughts. Joining me today is our chairman and CEO, Rob Spillman. We issued our news release yesterday after the market closed, and it's available on our website. After today's remarks, we will open up a call for question and answer session. We will post the transcript of the call on Bassett's investor website within 48 hours of this call. Due to calendar shifts, our first quarter of the fiscal year had 13 weeks as compared to 14 weeks in fiscal 2024. During today's call, certain statements we make may be considered forward-looking 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 provisions of the Private Securities Litigation Reform Act of 1995. The company cannot agree to or cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information, including important cautionary notes, please see the company's annual report on Form 10-K for the fiscal year ending November 30, 2024. Other filings with the SEC describing risks related to our business are available on our corporate website under the Investor tab. Now I'll turn it over to Rob for comments about our first quarter. Rob?

Thank you, Drew, and good morning, everyone. We are pleased to report improved operating results for our first quarter of 2025. The streamlining of our cost structure that began last year, coupled with higher levels of operating efficiency in both our wholesale and retail segments, combined to produce $4.8 million of improvement in operating profits. As I said last quarter, our strategic plan for 2025 was designed to weather another year of tepid demand and to keep us disciplined and focused on growth. Our management team is running with a leaner mindset, and we are accelerating new ideas and innovative products to position us well in providing quality home furnishings and design services. We're incorporating more technology into the customer experience and fine-tuning our marketing. We plan for housing sales to remain slow, and we're working to react quickly to the ups and downs of economic data and changes from Washington. Last week's report that consumer confidence was plummeting was disconcerting, but we believe the steps we've taken will help us run efficiently and get through this tough furniture economy. Let's move to the results of our first quarter. Consolidated sales were down by 5.1% for the first quarter, which was due largely to the comparison of 13 weeks this year to last year's fiscal 14 weeks. On a normalized basis, sales revenue for the first quarter increased 2.2%. We had a strong December and January due in part to the shorter timeframe between Black Friday and Christmas. The sales environment was a little more challenging in February. Our President's Day promotional event was not as successful as last year, and we've since seen the industry get more aggressive with discounts and credit promotions. Wholesale orders were down by 8.4 percent for the quarter or 1.4 percent normalized for the extra week. On a normalized basis compared to last year, Orders from our store network increased 4.2 percent, with December and January posting higher increases and February reporting a decrease due to a very aggressive promotional environment around President's Day. Orders from our traditional wholesale business, however, decreased 10 percent on a normalized basis, with February being the slowest month of the quarter. orders from our outdoor furniture business were essentially flat on a normalized basis. We were pleased that on a normalized basis, written sales in our corporate stores for the quarter increased 5.4% even with the softer February sales. Although retail gross margins fell modestly, cost reductions from our retail warehouse consolidation program and lower marketing expense contributed to our improved results. Our retail warehouse consolidation plan is ongoing, and we expect additional improvement in this regard as the year progresses. I'm especially excited with even more progress coming from our e-commerce and our drive to improve Bassett's omnichannel model. The investments that we made and will continue to make in BassettFurniture.com are responsible for Q1 e-commerce sales being up 36%. While we have not seen higher web traffic so far this year, a higher rate of conversion is currently contributing to sales growth. We expect that with continued investments in omnichannel, we have opportunities for growth in traffic and conversions for the remainder of the year. We are being more prescriptive in our marketing efforts. While we reduce marketing and advertising costs this quarter, we are disciplined about getting better returns from these investments. Direct mail was especially effective in supporting the launch of our whole home Copenhagen line and allows us to reinforce newness and our design services. We plan to incorporate direct mail more frequently in our promotional mix and in digital outreach activities for the remainder of the year. We continue to focus on our sales efforts outside of the store network. We reached a milestone when we signed dealer number 50 to our Bassett Custom Studio program in February. The 1,000 square foot concept from the recently acclaimed Best Custom Upholstery Company in the industry by Furniture Today is gathering steam. Part of the momentum we are seeing is attributable to last year's addition of 50 leather options to our true custom upholstery program. We are also about to unveil a new product visualization and B2B ordering system that will simplify the experience for the retail salespeople and their clients at the store level. With the April High Point Furniture Market around the corner, We continue to integrate greater innovation and newness into our product line to drive higher sales. Three new efforts are particularly noteworthy. First, the Hideaway Benchmade Domestic Dining Program, an extensive collection of tables and chairs in solid maple that features self-storing table leaves and an enhanced array of upholstered dining chairs. This program offers tremendous value in today's marketplace. Next are the two whole home product collections, Andorra and Newberry, which will launch later this year. Both feature transitional styling and exciting combinations of finishes and materials. And third, we are building on our program of accent furniture to enhance our retail displays. These products feature stone, metal, woven material, and leather combinations that are also conducive for web sales and round-out design projects. Tariffs have been top of mind across the industry for several months, culminating with President Trump's Rose Garden announcement 17 hours ago. Although 79% of our wholesale shipments in the first quarter were manufactured or assembled in the U.S., many materials such as fabrics or plywood used in the manufacturing process will now be exposed to tariffs, as will the remaining 21% that we bring in fully assembled. While the reciprocal tariffs are now known, There are additional tariffs on certain materials used in the manufacture of some of our products. The entire industry is working with outside experts to gain clarity on this unusual situation. We will determine what this means for our pricing structure on goods that are affected over the next several days. We do firmly believe that the announced tariff policies will not positively influence the American consumer to invest in home furnishings until the effects of these policies are fully implemented and understood. On March 13th, we announced that our board of directors approved our regular quarterly dividend of 20 cents per share. Dividends augmented by opportunistic share repurchases remain a key piece of our capital returns to shareholders. Now I'll turn things back over to Drew for more details on our financials. Drew?