Bassett Furniture Industries, Incorporated

Good day. Thank you for standing by. Welcome to the Best Furniture Second Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your first speaker, Mr. Mike Daniel, Chief Financial Officer. Please go ahead.

Thank you, Livia, for the introduction. Welcome to Bassett Furniture's earnings call for the second quarter of fiscal 2025, ended May 31, 2025. 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. We will be filing our Form 10Q early this morning, and that, too, will be on the website. After today's remarks, we will open the call up for a Q&A session. We will post a transcript of the call on Bassett's investor website following the conference call. 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 provision of the Private Securities Litigation Reform Act of 1995. Company cannot agree to or cannot guarantee the accuracy of any forecast or estimate, nor does it take 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 things over to Rob. Rob?

Okay. Thank you, Mike. Good morning, everyone, and thank you for joining us. One year ago, this quarter, Bassett announced a five-point restructuring strategy designed to grow business and improve profitability. We've been aggressively implementing that plan, which included development of a pipeline of innovative products to support our reputation as a company provides quality craftsmanship in the wholesale and retail channels and custom design services. All of us in the BASIC organization remain focused on executing these initiatives to meet these goals and reduce costs. I'm happy to report that second quarter results have improved again like last quarter, despite a very challenging sales environment that affects our entire industry. Consumers face a historically weak housing market, high interest rates, and uncertainty about the impact that the trade tariffs have on the cost of goods. This lack of confidence makes them very hesitant about investing in home furnishings right now. We believe that our restructuring program continues to have positive effect on our results and our future strategy. We've consolidated sales slightly, up 1.1% from last year's second quarter, excluding sales from NOAA Home Incorporated, which closed in late 2024. Consolidated revenue from the ongoing business increased 2.5%. Efforts to reduce our cost structure that began this time last year, coupled with higher levels of operating efficiency in both our wholesale and retail segments, delivered 2.5 million of operating profit, or 3% of sales, compared to a loss this time last year. Before I get to our detailed comments for the second quarter, it's important to reiterate how tough the housing and remodeling environment is in 2025, and we don't see that changing for the foreseeable future. The spring is normally the busiest time of the year for housing sales, and that activity flows to the home furnishings industry. Recent headline pointed to data from the National Association of Realtors showing existing home sales edged up 0.8% in May, ending a two-month streak of declines. However, that was the slowest pace for any May since 2009. Affordability remains a drag on housing, and like others, we're watching for some form of stimulus to spur mortgage activity and greater home sales and remodeling activity. Our strategic plan for this fiscal year was based on a continuation of the tepid housing market and that has characterized the past three years. The decisions and the investments we have made on new lines and product launches, expanding e-commerce capabilities and modifying our marketing activities are making a difference. That said, we have had to adjust to the impact of tariffs that have had on our supply chain and more importantly on consumer confidence in general. We are somewhat insulated versus others in the industry because almost 80% of our wholesale shipments are manufactured or assembled in our five U.S. factories. But the fabrics, plywood, componentry and finished goods that we do import from countries like Vietnam and India made it necessary to raise wholesale prices three to five percent and a quarter, something that we did not want to do in the current environment. We've also been successful in working intently with various fabric vendors to mitigate the effects of tariffs on further price hikes. We're closely watching the outcome of the final trade agreements, and our teams are monitoring the tariff activity daily as these challenges affect future orders and products in transit. The dawning of Liberation Day, April the 2nd, represented a direct line of demarcation between the more robust order pace that started the year and the slowness we clearly saw in the second quarter. March sales started off fine, but the rest of the quarter was down. Orders to our combined corporate and licensed store network grew by 9.6%, while our wholesale business from the open market declined by 6.6%, thus netting a 2.7% increase in all wholesale orders for the period. Our core products, led by our true custom upholstery with last year's addition of leather, drove most of the year-over-year improvement. Domestic motion and reclining product was also strong. As discussed last quarter, we recommitted to whole-home wood collections this year with three new offerings. The first, Copenhagen, is retailing well, and we are very pleased with the reaction to the 35-piece Newberry collection at the April home furnishings market. Newberry will arrive in Bassett stores and independent retailers this fall, followed later by the Andorra Collection. Also in wood product, our new domestic Benchmade Hideaway dining program sold very well in wholesale this spring and will begin laboring our factory here in Virginia in July and August. Bolstered in part by stronger sales in Q1, Corporate retail deliveries increased by 7.5%, and operating performance improved significantly compared to 2024. Written sales in the stores declined by 0.8%. Most of the key performance metrics were static during the quarter, although higher close ratios in the stores kept written sales almost flat while store traffic declined. Belt tightening from last year and restructuring in our marketing meant that we spent $1 million less in SG&A investments on $3.8 million more in delivered sales. The current pace of sales mandates that we continue to closely monitor all expenditures in the retail fleet. We've made progress on turning discontinued as is inventory into cash. And while the discounting will modestly affect retail gross margin, this plan is in place for the rest of the year. Wholesale sales to customers outside the Bassett store network were a mixed bag, but ultimately down by 6.6%. I noted earlier that March was strong and almost all of the decline here occurred in April. The decline was largely due to lower sales and our club level program, particularly with those accounts that generally buy containers directly from our vendors in Asia. There has been a natural hesitancy from these dealers to commit to imported goods in large quantities until greater clarity is attained on the tariff question. Once again, we are looking forward to getting the large product introduction from the April show on the retail floors this fall, as we felt we had a particularly strong market of placements in April. We're also encouraged by the progress from investments in our omnichannel model to enhance the retail customer experience. Written sales at BassettFurniture.com were up 31% in the second quarter versus last year, despite the housing issues, and this follows an increase of 36% in Q1. While website traffic was flat for the quarter, we have much higher levels of conversion, and we're reaching customers where we don't have physical stores. We continue to tweak the technology drivers to improve traffic, the user experience, and our site conversions. We made changes to our marketing mix in the second quarter to drive brand awareness, introduce new product lines, and to emphasize our custom design services. Last year, we relied exclusively on digital marketing for the quarter. This spring, we had success in using direct mail for the launch of the Copenhagen line and is now part of our marketing strategy for the remainder of the year. We tested spot TV and key markets with mixed results. We brought back our private sale to key customers three weeks ahead of the public Memorial Day sales event, allowing them to get ahead of the rush and have more opportunity at inventory. This strategy effectively pulled our holiday business forward and resulted in a slight increase in written business for the month of May. Promotional events like July 4th are key to driving traffic, which was week through June. Our new Bassett Custom Studio program in the open market grew by double digits as we added seven new retail stores. stores. We also grew our business with the interior design community and are working hard to become a bigger provider to the design channel that continues to grow in importance to the entire industry. We are moving ahead with architectural plans to open in two new markets, Cincinnati and Orlando. We plan to start construction this fall on both locations and expect to have these stores open in the first quarter of fiscal 2026. Our Concord, North Carolina corporate store has been closed since April for remodeling and will reopen in October. Our board of directors will consider our regular quarterly cash dividend of 20 cents per share next week. Dividends augmented by opportunistic share repurchase, remain a key piece of our capital return to shareholders. Now, I'll turn things back over to Mike for more details on our financial results. Mike.