# Bassett Furniture Industries Inc: Form 10-K for the period ended Nov 30, 2024 - Company: [Bassett Furniture Industries Inc](/companies/bset.md) (CIK 10329) - Form: 10-K - Filed: 2025-02-10 - Accepted by EDGAR: Feb 10, 2025, 09:09 ET - Period: 2024-11-30 - Accession: 0001437749-25-003216 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/10329/000143774925003216/bset20241130_10k.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/10329/000143774925003216/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-11-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2023-11-26 to 2024-11-30 | $329.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Gross profit | 12 months, 2023-11-26 to 2024-11-30 | $179.4m | us-gaap:GrossProfit | | Selling, general and administrative | 12 months, 2023-11-26 to 2024-11-30 | $187.5m | us-gaap:SellingGeneralAndAdministrativeExpense | | Operating income | 12 months, 2023-11-26 to 2024-11-30 | −$16.3m | us-gaap:OperatingIncomeLoss | | Interest expense | 12 months, 2023-11-26 to 2024-11-30 | $30.0k | us-gaap:InterestExpense | | Income tax | 12 months, 2023-11-26 to 2024-11-30 | −$4.7m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 12 months, 2023-11-26 to 2024-11-30 | −$9.7m | us-gaap:NetIncomeLoss | | Diluted EPS | 12 months, 2023-11-26 to 2024-11-30 | −$1.11 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 12 months, 2023-11-26 to 2024-11-30 | −$1.11 | us-gaap:EarningsPerShareBasic | | Operating cash flow | 12 months, 2023-11-26 to 2024-11-30 | $4.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 12 months, 2023-11-26 to 2024-11-30 | $5.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 12 months, 2023-11-26 to 2024-11-30 | $6.7m | us-gaap:PaymentsOfDividends | | Share repurchases | 12 months, 2023-11-26 to 2024-11-30 | $1.4m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2024-11-30 | $39.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2024-11-30 | $141.5m | us-gaap:AssetsCurrent | | Total assets | at 2024-11-30 | $341.2m | us-gaap:Assets | | Current liabilities | at 2024-11-30 | $73.4m | us-gaap:LiabilitiesCurrent | | Shareholders' equity | at 2024-11-30 | $167.3m | us-gaap:StockholdersEquity | ## Business As filed, 22,735 characters. (dollar amounts in thousands except per share data) ### General Bassett is a leading retailer, manufacturer and marketer of branded home furnishings. Our products are sold primarily through a network of Company-owned and licensee-owned branded stores under the Bassett Home Furnishings (“BHF”) name, with additional distribution through other wholesale channels including multi-line furniture stores, many of which feature Bassett galleries or design centers. We also sell our products through our website at www.bassettfurniture.com. We were founded in 1902 and incorporated under the laws of Virginia in 1930. Our rich 122-year history has instilled the principles of quality, value, and integrity in everything we do, while simultaneously providing us with the expertise to respond to ever-changing consumer tastes and meet the demands of a global economy. With 87 BHF stores at November 30, 2024, we have leveraged our strong brand name in furniture into a network of Company-owned and licensed stores that focus on providing consumers with a friendly and casual environment for buying furniture and accessories. Our store program is designed to provide a single source home furnishings retail store that provides a unique combination of stylish, quality furniture and accessories with a high level of customer service. In order for the Bassett brand to reach markets that cannot be effectively served by our retail store network, we also distribute our products through other wholesale channels including multi-line furniture stores, many of which feature Bassett galleries or design centers. We use a network of over 30 independent sales representatives who have stated geographical territories. These sales representatives are compensated based on a standard commission rate. We believe this blended strategy provides us the greatest ability to effectively distribute our products throughout the United States and ultimately gain market share. The BHF stores feature custom order furniture, free in-home or virtual design visits (“home makeovers”) and coordinated decorating accessories. Our philosophy is based on building strong long-term relationships with each customer. Salespeople are referred to as “Design Consultants” and are trained to evaluate customer needs and provide comprehensive solutions for their home decor. Until a rigorous training and design certification program is completed, Design Consultants are not authorized to perform in-home or virtual design services for our customers. We consider our website to be the front door to our brand experience where customers can research our furniture and accessory offerings and subsequently buy online or engage with an in-store design consultant. We know that we are driving a significant percentage of the retail foot traffic to our store network and our open market customers through engagement with www.bassettfurniture.com. Digital outreach strategies have become the primary vehicle for brand advertising and customer acquisition. We expect to supplement the digital outreach strategies in 2025 with added direct mail and television. We introduced a new web platform late in 2023 that leverages world class features including enhanced customer research capabilities and streamlined navigation. Since the debut of the new site, we have seen increased engagement with the brand through a greater number of page views per customer along with more time spent on the site. We have also seen an increase in average order value that has resulted in increased e-commerce revenue. Although e-commerce sales continue to be small relative to in-store sales, we are pleased that we have seen a greater than 20% e-commerce sales increase over the back half of the fiscal year. We will continue to invest in ongoing improvements to the aesthetics and user experience that we provide on our website. While we have made it easier to purchase on-line, we will not compromise our in-store experience or the quality of our in-home makeover capabilities. During the fourth quarter of fiscal 2022 we acquired Noa Home Inc. (“Noa Home”) (see Note 3 to the Consolidated Financial Statements for additional information regarding the acquisition). A mid-priced e-commerce furniture retailer headquartered in Montreal, Canada, Noa Home had operations in Canada, Australia, Singapore and the United Kingdom. After nearly two years of operating losses, we concluded during the second quarter of 2024 that Noa Home was not likely to achieve profitability at any time in the foreseeable future and decided to cease operations by selling the inventory in an orderly fashion. As of November 30, 2024, we have substantially completed the liquidation of Noa Home’s assets and liabilities. In the second quarter of 2024 we recognized non-cash charges totaling $2,401 related to the impairment of certain long-lived assets of Noa Home and the establishment of a reserve against Noa Home’s remaining inventory at that time. Upon substantially completing the liquidation of Noa Home at the end of the fourth quarter of 2024, we recognized a charge of $962 associated with the transfer of the cumulative translation losses out of accumulated other comprehensive income. In 2018, we added outdoor furniture to our offerings with the acquisition of the Lane Venture brand. Our strategy is to distribute these products outside of our BHF store network through independent sales representatives each of which have a stated geographic territory. Using Lane Venture as a platform, we developed the Bassett Outdoor brand that is only marketed through the BHF store network. This allows Bassett branded products to move from inside the home to outside the home to capitalize on the growing trend of outdoor living. In the second quarter of 2023, we debuted the Bassett Outdoor contract line at the HD Expo Show in Las Vegas targeting the hospitality segment. We have factories in Newton, North Carolina that manufacture both stationary and motion upholstered furniture for inside the home along with our outdoor furniture offerings. We also have a factory in Martinsville, Virginia that assembles and finishes our custom bedroom and dining offerings. We also own a facility in Haleyville, Alabama where we manufacture aluminum frames for our outdoor furniture. In addition to the furniture that we manufacture domestically, we source most of our formal bedroom and dining room furniture (casegoods) and certain leather upholstery offerings from several foreign plants, primarily in Vietnam. Approximately 80% of our wholesale revenues are derived from products that are manufactured in the United States using a mix of domestic and globally sourced components and raw materials. During the first quarter of 2022, we entered into a definitive agreement to sell substantially all of the assets of our wholly-owned subsidiary, Zenith Freight Lines, LLC (“Zenith”) to J.B. Hunt Transport Services, Inc. (“J.B. Hunt”), and the transaction was completed on February 28, 2022. As a result of the sale, the operations of our former logistical services segment, which consisted entirely of the operations of Zenith, are presented in this Annual Report on Form 10-K as discontinued operations. ### Operating Segments We have strategically aligned our business into two reportable segments: - Wholesale - Retail—Company-owned stores #### Wholesale Segment Overview The wholesale segment is involved principally in the design, manufacturing and sourcing of furniture products that are distributed through our BHF store network (both Company-owned and licensee-owned stores) and various independent retailers. The wholesale furniture industry is very competitive and there are a large number of manufacturers both within and outside the United States who compete in the market on the basis of product quality, price, style, delivery and service. Additionally, many retailers source imported product directly, thus bypassing domestic furniture manufacturers and wholesale importers. We believe that we can be successful in the current competitive environment because our products represent excellent value combining attractive prices, quality and styling, prompt delivery, and superior service. Wholesale shipments by category for the last three fiscal years, excluding intercompany sales to our retail segment, are summarized below: | | 2024\* External | Intercompany | Total | | 2023 External | Intercompany | Total | | 2022 External | Intercompany | Total | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Bassett Custom Upholstery | $79,344 | $55,168 | $134,512 | 64.8% | $89,005 | $66,363 | $155,368 | 62.4% | $124,565 | $82,437 | $207,002 | 63.8% | | Bassett Leather | 15,705 | 1,919 | 17,624 | 8.5% | 26,701 | 1,171 | 27,872 | 11.2% | 35,953 | 76 | 36,029 | 11.1% | | Bassett Custom Wood | 14,075 | 16,674 | 30,749 | 14.8% | 17,357 | 20,070 | 37,427 | 15.0% | 22,534 | 24,764 | 47,298 | 14.6% | | Bassett Casegoods | 11,317 | 13,260 | 24,577 | 11.8% | 12,329 | 15,915 | 28,244 | 11.3% | 15,628 | 18,612 | 34,240 | 10.5% | | Total | $120,441 | $87,021 | $207,462 | 100.0% | $145,392 | $103,519 | $248,911 | 100.0% | $198,680 | $125,889 | $324,569 | 100.0% | \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. Approximately 20% of our 2024 wholesale sales were of imported product compared to 22% in 2023 and 2022. We define imported product as fully finished product that is sourced. Our domestic product includes certain products that contain components which were also sourced. We continue to believe that a blended strategy including domestically produced products primarily of a custom-order nature combined with sourcing of major collections provides the best value and quality of products to our customers. The dollar value of our wholesale backlog, representing orders received but not yet shipped to the BHF store network or independent dealers, was $21,750 at November 30, 2024 and $18,478 at November 25, 2023. We use lumber, fabric, leather, foam and other materials in the production of wood and upholstered furniture. These components are purchased from a variety of domestic and international suppliers and are widely available. The price and availability of foam, which is highly dependent on the cost of oil and available capacity of oil refineries, can be subject to significant volatility from time to time. #### Retail Segment Overview – Company-Owned Retail Stores The retail—Company-owned stores segment consists of 58 BHF stores that provide consumers with a friendly and casual environment for buying furniture and accessories. The retail furniture industry remains very competitive and includes local furniture stores, regional furniture retailers, national department and chain stores, single-vendor branded retailers and on-line retailers. As a whole, our store network which includes 29 licensee-owned stores, ranks in the top 40 in retail furniture sales in the United States. The following table shows the number of Company-owned stores by state at November 30, 2024: | State | Number of Stores | State | Number of Stores | | --- | ---: | --- | ---: | | Arizona | 3 | Nevada | 1 | | Arkansas | 1 | New Jersey | 2 | | California | 2 | New York | 4 | | Connecticut | 3 | North Carolina | 5 | | Delaware | 1 | Ohio | 2 | | Florida | 5 | Oklahoma | 1 | | Georgia | 3 | Pennsylvania | 2 | | Kentucky | 1 | South Carolina | 1 | | Maryland | 3 | Tennessee | 1 | | Massachusetts | 1 | Texas | 11 | | Missouri | 1 | Virginia | 4 | | | | Total | 58 | Net sales for our Company-owned retail stores by major product category for the last three fiscal years are summarized below: | | 2024\* | | 2023 | | 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Bassett Custom Upholstery | $111,943 | 54.7% | $134,000 | 56.8% | $163,755 | 57.4% | | Bassett Leather | 4,990 | 2.4% | 1,951 | 0.8% | 1,707 | 0.6% | | Bassett Custom Wood | 32,201 | 15.7% | 36,732 | 15.6% | 43,208 | 15.2% | | Bassett Casegoods | 26,179 | 12.8% | 32,252 | 13.7% | 40,146 | 14.1% | | Accessories, mattresses & other (1) | 29,250 | 14.3% | 31,005 | 13.1% | 36,303 | 12.7% | | Total | $204,563 | 100.0% | $235,940 | 100.0% | $285,119 | 100.0% | (1) Includes sales of goods other than Bassett-branded products, such as accessories and bedding, and also includes the sale of furniture protection plans. \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. We also continue to examine the performance of every one of our stores. Store traffic has been declining and the effect on our retail model has become increasingly challenging. We believe that on a market-by-market basis, there will be fewer stores in the future. We will continue to evaluate store-by-store performance as we seek the optimal store count in the markets in which we compete at retail. While we opened two new stores in 2024, we are currently negotiating leases for stores in two new markets with potential opening dates in late 2025 or 2026. #### Corporate and Other In addition to the two reportable segments described above, we include our remaining business activities in a reconciling category known as Corporate and other. This category includes the shared costs of corporate functions such as treasury and finance, information technology, accounting, human resources, legal and others, including certain product development and marketing functions benefitting both wholesale and retail operations. We consider our corporate functions to be other business activities and have aggregated them with any of our operating segments that do not meet the requirements to be reportable segments. As of and for the periods ended November 30, 2024, November 25, 2023 and November 26, 2022, the only such operating segment included in Corporate and other was Noa Home, which was acquired on September 2, 2022. All sales reported in our Corporate and other category were attributable to Noa Home, which generated substantially all of its sales outside of the United States. During the second quarter of 2024 we concluded that Noa Home was not likely to achieve profitability in the foreseeable future and decided to cease operations by selling the inventory in an orderly fashion. As of November 30, 2024, we have substantially completed the liquidation of Noa Home. ### Trademarks Our trademarks, including “Bassett” and the names of some of our marketing divisions, products and collections, are significant to the conduct of our business. This is important due to consumer recognition of the names and identification with our broad range of products. Certain of our trademarks are licensed to independent retailers for use in full store and store gallery presentations of our products. We also own copyrights that are important in the conduct of our business. ### Government Regulations We believe that we have materially complied with all federal, state and local standards regarding safety, health and pollution and environmental controls. We may also be affected by laws and regulations of countries from which we source goods. Labor, environmental and other laws and regulations change over time, especially in the developing countries from which we source. Changes in these areas of regulation could negatively impact the cost and availability of sourced goods. The timing and extent to which these regulations could have an adverse effect on our financial position or results of operations is difficult to predict. In addition, the imposition of new or increased duties, tariffs, retaliatory tariffs and trade limitations with respect to foreign-sourced products could negatively impact the cost of such goods. Based on the present facts, we do not believe that they will have a material adverse effect on our financial position or future results of operations. ### Human Capital We employed 1,228 people as of November 30, 2024. Our associate count represents a decrease of 161 from a year ago, 71 due to headcount reductions in our manufacturing facilities in response to business conditions and the consolidation of our two wood manufacturing facilities, 43 in our retail segment primarily attributable to the elimination of certain retail support functions and warehouse consolidation, and 47 at our corporate office related to the closure of our central customer care center and the elimination of several corporate overhead functions. Headcount by segment is as follows: - 644 in the wholesale segment - 453 in the retail segment - 131 in the corporate and other segment We approach our workplace culture by being ***Invested… In Each Other***, the tenets of which include fostering a workplace that promotes respect for each other, investing in our associates’ well-being, providing safe and comfortable work environments, offering opportunities to develop personally and professionally, being good stewards of the environment, and giving back to the communities in which we work and live. We believe that these investments are crucial to the success of our associates and our Company. #### Workplace Respect We value the diversity of our associates as an essential component in the way we do business. It continues to be Bassett’s policy to be equitable and impartial in our relations with our associates and to base all employment-related decisions upon valid, job-related factors, without regard to race, color, religion, national origin, age, sex, gender identity and gender expression, transgender status, pregnancy, physical or mental disability, genetic information, veteran or other protected status. We continue to maintain and enforce our policy prohibiting discrimination and harassment in our workplace. Our managers are trained in how to prevent, recognize and respond to possible inappropriate behavior. Associates have several available avenues for reporting concerns, including a confidential hotline. We promptly and carefully investigate each complaint of harassment or discrimination. More details about our commitment to preventing discrimination and harassment in our workplaces are available on our website. #### Quality of Life We continue to invest in the physical and mental well-being of our associates, their spouses and their children. - We introduced a benefits and wellness app, free to our associates and their dependents, which assists with locating best-in-class, in terms of quality and cost, healthcare providers and facilities, along with free virtual exercise therapy for back and joint care. - We offer several free online mental and behavioral health resources, with unlimited access to board-certified psychiatrists and licensed therapists. - Our wellness programs, including onsite health clinics, personalized health coaching, mental health counseling, and incentivized healthy lifestyle choices, are designed to improve associate health and reduce healthcare costs for both the associate and the Company. - We provide opportunities for our associates to meet with a certified financial planner for personalized retirement planning and budget counseling. - We offer comprehensive benefit plans including Company subsidized health insurance, 401(k) Plan with Company matching contributions, and paid time off. We believe our benefit plans are competitive and meet the needs of most of our associates. #### Work Environment Our investments in our facilities continue, which improve our associates’ safety and comfort, and increase efficiency. These include: - Installed vacuum lifts, designed to reduce manual lifting, at our Martinsville facility - Improved air quality with the addition of a humidity-controlled air handling system and battery-operated forklifts - At our upholstery locations, we continued to upgrade the lighting in our manufacturing areas and warehouses, along with resurfacing floors to improve safety and aesthetics - Improved security with the installation of a biometric (finger scan) timekeeping system at all our manufacturing facilities. We installed a comprehensive human resources, benefits, payroll and timekeeping system which gives our associates the ability to view, and where applicable, update their personal information, benefits enrollments, pay history and time worked in real time. #### Professional Development We offer opportunities to our associates for educational and skill development, including: - Tuition reimbursement for associates who desire to further their education. - Online training for managers, with classes completed monthly. - Training for customer-facing associates designed to enhance the in-store and follow up experiences for our customers. #### Environmental and Civic Responsibility Representing our commitment to sustainably sourced hardwoods, each Arbor Day since 2021, over 30 of our associates travel to central Ohio to take part in the planting of Appalachian hardwood seedlings. This event is hosted by our BenchMade supply partners, and over 200,000 trees have been planted to date – and counting. Additionally, we remain committed to our recycling efforts. Materials recycled in 2024 include: | | Tons | | Tons | | --- | ---: | --- | ---: | | Wood dust | 1,620 | Fabric scraps | 155 | | Paper/cardboard | 174 | Wood Pallets | 78 | | Metal/electronics | 45 | Finishing materials | 39 | | Foam | 15,750 | cubic feet | | Our partnership with the Stephen Siller Tunnels2Towers Foundation reached the 10-year mark in 2024. To date, we have furnished over 40 smart homes built for wounded veterans and first responders. Additionally, we supported numerous other charitable and civic organizations with monetary and in-kind donations. ### Major Customers Our risk exposure related to our customers, consisting primarily of trade accounts receivable along with certain guarantees, net of recognized reserves, totaled approximately $18,281 and $15,636 at November 30, 2024 and November 25, 2023, respectively. At November 30, 2024 and November 24, 2023, approximately 43% and 35%, respectively, of the aggregate risk exposure, net of reserves, was attributable to five customers. In fiscal 2024, 2023 and 2022, no customer accounted for more than 10% of total consolidated net sales. ### Available Information We file our annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov. Through our website, www.bassettfurniture.com, we make available free of charge as soon as reasonably practicable after electronically filing or furnishing with the SEC, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments thereto. ## Risk factors As filed, 10,491 characters. The following risk factors should be read carefully in connection with evaluating our business and the forward-looking information contained in this Annual Report on Form 10-K. The risk factors below represent what we believe are the known material risk factors with respect to us and our business. Any of the following risks could materially adversely affect our business, operations, industry, financial position or future financial results. ### Risks Related to Our Retail Operations ***We face a volatile retail environment and changing economic conditions that may further adversely affect consumer demand and spending.*** Historically, the home furnishings industry has been subject to cyclical variations in the general economy and to uncertainty regarding future economic prospects. Should current economic conditions weaken, the current rate of housing starts decline, or rising inflation persist, consumer confidence and demand for home furnishings could deteriorate which could adversely affect our business through its impact on the performance of our Company-owned stores, as well as our licensees and the ability of a number of them to meet their obligations to us. ***Our retail stores face significant competition from national, regional and local retailers of home furnishings, including increasing on-line competition via the internet.*** The retail market for home furnishings is highly fragmented and intensely competitive. We currently compete against a diverse group of retailers, including national department stores, regional or independent specialty stores, and dedicated franchises of furniture manufacturers. National mass merchants such as Costco also have limited product offerings. We also compete with retailers that market products through store catalogs and the internet. In addition, there are few barriers to entry into our current and contemplated markets, and new competitors may enter our current or future markets at any time. We have also seen increasing competition from retailers offering consumers the ability to purchase home furnishings via the internet for home delivery, and this trend is expected to continue. Our existing competitors or new entrants into our industry may use a number of different strategies to compete against us, including aggressive advertising, pricing and marketing, extension of credit to customers on terms more favorable than we offer, and expansion into markets where we currently operate. Competition from any of these sources could cause us to lose market share, revenues and customers, increase expenditures or reduce prices, any of which could have a material adverse effect on our results of operations. ### Our licensee-owned stores may not be able to meet their obligations to us. We have a significant amount of accounts receivable attributable to our network of licensee-owned stores. We also guarantee one lease each for two licensees. If these stores do not generate the necessary level of sales and profits, the licensees may not be able to fulfill their obligations to us resulting in additional bad debt expenses and real estate related losses ### Risks Related to Our Brand and Product Offerings ***Failure to successfully anticipate or respond to changes in consumer tastes and trends in a timely manner could adversely impact our business, operating results and financial condition.*** Sales of our furniture are dependent upon consumer acceptance of our designs, styles, quality and price. As with all retailers, our business is susceptible to changes in consumer tastes and trends. We attempt to monitor changes in consumer tastes and home design trends through attendance at international industry events and fashion shows, internal marketing research, and communication with our retailers and design consultants who provide valuable input on consumer tendencies. However, such tastes and trends can change rapidly and any delay or failure to anticipate or respond to changing consumer tastes and trends in a timely manner could adversely impact our business, operating results and financial condition. In addition, certain suppliers may require extensive advance notice of our requirements in order to produce products in the quantities we desire. This long lead time may require us to place orders far in advance of the time when certain products will be offered for sale, thereby exposing us to risks relating to shifts in consumer demand and trends, and any downturn in the U.S. economy. ***Our success depends upon our brand, marketing and advertising efforts and pricing strategies, and if we are not able to maintain and enhance our brand, or if we are not successful in these efforts and strategies, our business and operating results could be adversely affected.*** Maintaining and enhancing our brand is critical to our ability to expand our base of customers and drive increased traffic at both Company-owned and licensee-owned stores and to our website. While digital advertising and outreach continue to dominate our marketing expenditures in 2024, we plan to supplement those strategies in 2025 with added direct mail and television. We have also invested heavily in our website and e-commerce. We cannot provide assurance that our marketing, advertising and other efforts to promote and maintain awareness of our brand will not require us to incur substantial costs. If these efforts are unsuccessful or we incur substantial costs in connection with these efforts, our business, operating results and financial condition could be adversely affected. ### Risks Related to Material Sourcing and Supply ***Our use of foreign sources of production for a portion of our products exposes us to certain additional risks associated with international operations.*** Our use of foreign sources for the supply of certain of our products exposes us to risks associated with overseas sourcing. These risks are related to government regulation, volatile ocean freight costs, delays in shipments, and extended lead time in ordering. The U.S. government as well as governments in the foreign countries where we source our products may change their laws, regulations and policies, including those related to tariffs and trade barriers, investments, taxation and exchange controls which could make it more difficult to service our customers resulting in an adverse effect on our earnings. ***Fluctuations in the price, availability and quality of raw materials could result in increased costs or cause production delays which might result in a decline in sales, either of which could adversely impact our earnings.*** We use various types of wood, foam, fibers, fabrics, leathers, and other raw materials in manufacturing our furniture. Certain of our raw materials, including fabrics, are purchased both abroad and domestically. Fluctuations in the price, availability and quality of raw materials could result in increased costs or a delay in manufacturing our products, which in turn could result in a delay in delivering products to our customers. For example, lumber prices fluctuate over time based on factors such as weather and demand, which in turn impact availability. There is no guarantee that we will be able to successfully pass along additional cost increases as they arise and rising inflation could have an adverse impact upon consumer demand for discretionary items such as home furnishings. Production delays or upward trends in raw material prices could result in lower sales or margins, thereby adversely impacting our earnings. ### Risks Related to Electronic Data Processing and Digital Information ***We rely extensively on computer systems to process transactions, summarize results and manage our business. Disruptions in both our primary and back-up systems could adversely affect our business and operating results.*** Our primary and back-up computer systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, natural disasters and errors by employees. Though losses arising from some of these issues would be covered by insurance, interruptions of our critical business computer systems or failure of our back-up systems could reduce our sales or result in longer production times. If our critical business computer systems or back-up systems are damaged or cease to function properly, we may have to make a significant investment to repair or replace them. For example, we disclosed a cybersecurity incident in Item 1.05 of Current Reports on Form 8-K and 8-K/A filed on July 15, 2024 and August 6, 2024, respectively, relating to the detection of unauthorized occurrences on a portion of our information technology (IT) systems. ***We have previously and may continue in the future to incur costs resulting from security risks we face in connection with our electronic processing, storage and transmission of confidential information whether on computer systems maintained on our internal network or by third parties that may host certain of our systems. We may also incur reputational harm resulting from these security risks.*** We accept electronic payment cards in our stores and also gather certain personal identifiable information in the processing of our retail sales transactions. We also store and process confidential information pertaining to our employees and other third parties on our networks. We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information. In addition, if there were a disclosure of confidential information provided by, or concerning, our employees, customers or other third parties, including through inadvertent disclosure, unapproved dissemination, or unauthorized access, our reputation could be harmed, and we could be subject to civil or criminal liability and regulatory actions. Proceedings related to theft of credit or debit card information may be brought by payment card providers, banks and credit unions that issue cards, cardholders (either individually or as part of a class action lawsuit) and federal and state regulators. Any such proceedings could distract our management from running our business and cause us to incur significant unplanned losses and expenses. Consumer perception of our brand could also be negatively affected by these events, which could further adversely affect our results and prospects. ## Cybersecurity As filed, 7,295 characters. ### Risk Management and Strategy The Company has developed a standards-based information security program to address risks from cybersecurity threats. The program includes policies and procedures that identify how security measures and controls are developed, implemented, and maintained. The maturity and effectiveness of the security program is reviewed biennially by a reputable third party. A risk assessment is conducted annually. The risk assessment along with risk-based analysis and judgment are used to select security controls to address risks. During this process, the following factors, among others, are considered: likelihood and severity of risk, impact on the Company and others if a risk materializes, feasibility and cost of controls, and impact of controls on operations and others. Specific controls that are used to some extent by the Company include endpoint threat detection and response (EDR), identity and access management (IAM), multi-factor authentication (MFA), firewalls and intrusion detection and prevention, and vulnerability and patch management. An internal information security audit program is in place to ensure controls remain operational and effective. Third-party security firms are used by the Company in different capacities to provide or operate some of these controls and technology systems. Third parties are also used to conduct assessments, such as vulnerability scans and penetration testing of the Company and its systems. The Company uses a variety of processes to address cybersecurity threats related to the use of third-party technology and services. The Company has a written incident response plan ("IRP") and conducts tabletop exercises to enhance incident response preparedness. Disaster recovery plans are used to prepare for the potential for a disruption in technology we rely on. Employees undergo security awareness training, including phishing simulation training, when hired and periodically throughout the year. The Company’s executive leadership team meets regularly to address enterprise risks, and cybersecurity is a risk category addressed by that group. In addition to assessing major risks, management identifies and monitors such risks. At least annually, the Company’s executive leadership reviews with the Board of Directors the major risks identified in the enterprise risk management process, as well as the steps identified to mitigate such risks. Each of the business and functional leaders responsible for the management of these identified risks also regularly discuss with the Board changes in assessment of these risks and mitigation plans. The Company (or third parties it relies on) may not be able to fully, continuously, and effectively implement security controls as intended. As described above, we utilize a risk-based approach and judgment to determine the security controls to implement and it is possible we may not implement appropriate controls if we do not recognize or underestimate a particular risk. In addition, security controls, no matter how well designed or implemented, may only mitigate and not fully eliminate risks. And events, when detected by security tools or third parties, may not always be immediately understood or acted upon. The Company activated their incident response plan to address a security incident in 2024. The Company is not aware of additional cybersecurity threats or any material cybersecurity incidents to date that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. On July 10, 2024, we detected unauthorized occurrences on a portion of our information technology (IT) systems. Upon detecting the unauthorized occurrences, we immediately began taking steps to contain, assess and remediate the cybersecurity incident, including beginning an investigation with leading external cybersecurity specialists, activating our incident response plan, and shutting down some systems. As a result of these and other measures, we believe the threat actor was ejected from our IT systems on July 10, 2024. After we shut down some of our systems, we experienced disruption to certain of our operations, including interrupted manufacturing at our domestic plants and delayed order fulfillment for our retail network and delay of some wholesale shipments. Within a few days of the incident, we were able to resume retail order fulfillment and caught up on fulfilling wholesale orders that were delayed as a result of the cybersecurity incident. We have fully restored the IT systems and data and our investigation has not found evidence that any of our core operating systems for manufacturing, wholesale and retail order processing and fulfillment, or financial reporting were impacted. While we believe the impacts were not material to our financial condition and results of operations for the fiscal year, we estimate that between $1,000 and $2,000 of sales were lost due to the shutdown during the cybersecurity incident. During the third quarter of 2024, we also incurred legal and remediation costs related to the incident of approximately $98 which are included in selling, general and administrative expenses. In addition, cost of goods sold for year ended November 30, 2024 includes $609 for wages paid to hourly production employees during the work stoppage resulting from the cybersecurity incident. Because no inventory was produced during the temporary shutdown of our manufacturing operations, these wages were charged directly to expense. We are seeking reimbursement of certain costs, expenses and losses stemming from the cybersecurity incident and have submitted a claim to our cybersecurity insurer. We expect final resolution and payment of the claim during the first half of 2025. Additionally, in Item 1A Risk Factors under the heading of "Risks Related to Electronic Data Processing and Digital Information,” forward-looking cybersecurity threats that could have a material impact on the Company are discussed. That section of Item 1A should be read in conjunction with this Item 1C. ### Governance The Chief Information Officer ("CIO") holds primary oversight responsibility for the team managing the development, operation, and maintenance of our information security program. This team also has responsibility to maintain and enhance the Company’s written cyber security incident response plan, which identifies incident severity classifications and serves as a trigger for escalation for the response team. With over 25 years of experience across diverse IT technologies, the CIO brings extensive expertise to the role. The CIO is also a member of the Company’s executive leadership team, meeting regularly with the CEO, CFO, and other senior leaders. The CIO directly reports to the Board at least annually, addressing cybersecurity risks and strategy, and attends Board meetings to discuss cybersecurity matters as needed. The Audit Committee provides oversight of the information security program. The CIO reports to the Audit Committee annually on cybersecurity risks and related internal controls and attends quarterly meetings to provide updates and address any questions regarding cybersecurity and information technology systems. ## Properties As filed, 1,704 characters. We own the following facilities, by segment: #### Wholesale Segment: | Facility | Location | | --- | --- | | Bassett Wood Division | Martinsville, Va. | | Bassett Upholstery Division | Newton, N.C. | | Bassett Upholstery Division | Haleyville, Alabama | | 2 Warehouses | Bassett, Va. | In general, these facilities are suitable and are considered to be adequate for the continuing operations involved. All facilities are in regular use and provide adequate capacity for our manufacturing and warehousing needs. In addition to the owned properties shown above, we lease facilities in Newton, North Carolina for the manufacturing of upholstered furniture and the manufacturing and warehousing operations of Lane Venture and Bassett Outdoor. #### Retail Segment: Real estate associated with our retail segment consists of eight owned locations with an aggregate square footage of 203,465 and a net book value of $24,137. These stores are located as follows: | | | | --- | --- | | Concord, North Carolina | Greensboro, North Carolina | | Greenville, South Carolina | Fredericksburg, Virginia | | Houston, Texas | Louisville, Kentucky | | Knoxville, Tennessee | Tampa, Florida | Of these locations, two are subject to land leases. Our remaining 50 store locations are leased from third parties. In addition to retail stores, we also lease eleven locations for use as regional warehouses and home delivery distribution centers. Corporate and Other: We own our corporate office building, which includes an annex, located in Bassett, Va. See Note 15 to the Consolidated Financial Statements included under Item 8 of this Annual Report for more information with respect to our operating lease obligations. ## Management's discussion and analysis As filed, 60,596 characters. (Amounts in thousands except share and per share data) ### Overview Bassett is a leading retailer, manufacturer and marketer of branded home furnishings. Our products are sold primarily through a network of Company-owned and licensee-owned branded stores under the Bassett Home Furnishings (“BHF”) name, with additional distribution through other wholesale channels including multi-line furniture stores, many of which feature Bassett galleries or design centers. We also sell our products through our website at www.bassettfurniture.com. We were founded in 1902 and incorporated under the laws of Virginia in 1930. Our rich 122-year history has instilled the principles of quality, value, and integrity in everything we do, while simultaneously providing us with the expertise to respond to ever-changing consumer tastes and meet the demands of a global economy. With 87 BHF stores at November 30, 2024, we have leveraged our strong brand name in furniture into a network of Company-owned and licensed stores that focus on providing consumers with a friendly and casual environment for buying furniture and accessories. Our store program is designed to provide a single source home furnishings retail store that provides a unique combination of stylish, quality furniture and accessories with a high level of customer service. In order for the Bassett brand to reach markets that cannot be effectively served by our retail store network, we also distribute our products through other wholesale channels including multi-line furniture stores, many of which feature Bassett galleries or design centers. We use a network of over 30 independent sales representatives who have stated geographical territories. These sales representatives are compensated based on a standard commission rate. We believe this blended strategy provides us the greatest ability to effectively distribute our products throughout the United States and ultimately gain market share. The BHF stores feature custom order furniture, free in-home or virtual design visits (“home makeovers”) and coordinated decorating accessories. Our philosophy is based on building strong long-term relationships with each customer. Salespeople are referred to as “Design Consultants” and are trained to evaluate customer needs and provide comprehensive solutions for their home decor. Until a rigorous training and design certification program is completed, Design Consultants are not authorized to perform in-home or virtual design services for our customers. We consider our website to be the front door to our brand experience where customers can research our furniture and accessory offerings and subsequently buy online or engage with an in-store design consultant. We know that we are driving a significant percentage of the retail foot traffic to our store network and our open market customers through engagement with www.bassettfurniture.com. Digital outreach strategies have become the primary vehicle for brand advertising and customer acquisition. We expect to supplement the digital outreach strategies in 2025 with added direct mail and television. We introduced a new web platform late in 2023 that leverages world class features including enhanced customer research capabilities and streamlined navigation. Since the debut of the new site, we have seen increased engagement with the brand through a greater number of page views per customer along with more time spent on the site. We have also seen an increase in average order value that has resulted in increased e-commerce revenue. Although e-commerce sales continue to be small relative to in-store sales, we are pleased that we have seen a greater than 20% e-commerce sales increase over the back half of the fiscal year. We will continue to invest in ongoing improvements to the aesthetics and user experience that we provide on our website. While we have made it easier to purchase on-line, we will not compromise our in-store experience or the quality of our in-home makeover capabilities. During the fourth quarter of fiscal 2022 we acquired Noa Home Inc. (“Noa Home”) (see Note 3 to the Consolidated Financial Statements for additional information regarding the acquisition). A mid-priced e-commerce furniture retailer headquartered in Montreal, Canada, Noa Home had operations in Canada, Australia, Singapore and the United Kingdom. After nearly two years of operating losses, we concluded during the second quarter of 2024 that Noa Home was not likely to achieve profitability at any time in the foreseeable future and decided to cease operations by selling the inventory in an orderly fashion. As of November 30, 2024, we have substantially completed the liquidation of Noa Home’s assets and liabilities. In the second quarter of 2024 we recognized non-cash charges totaling $2,401 related to the impairment of certain long-lived assets of Noa Home and the establishment of a reserve against Noa Home’s remaining inventory at that time. Upon substantially completing the liquidation of Noa Home at the end of the fourth quarter of 2024, we recognized a charge of $962 associated with the transfer of the cumulative translation losses out of accumulated other comprehensive income. In 2018, we added outdoor furniture to our offerings with the acquisition of the Lane Venture brand. Our strategy is to distribute these products outside of our BHF store network through independent sales representatives each of which have a stated geographic territory. Using Lane Venture as a platform, we developed the Bassett Outdoor brand that is only marketed through the BHF store network. This allows Bassett branded products to move from inside the home to outside the home to capitalize on the growing trend of outdoor living. In the second quarter of 2023, we debuted the Bassett Outdoor contract line at the HD Expo Show in Las Vegas targeting the hospitality segment. We have factories in Newton, North Carolina that manufacture both stationary and motion upholstered furniture for inside the home along with our outdoor furniture offerings. We also have a factory in Martinsville, Virginia that assembles and finishes our custom bedroom and dining offerings. We also own a facility in Haleyville, Alabama where we manufacture aluminum frames for our outdoor furniture. In addition to the furniture that we manufacture domestically, we source most of our formal bedroom and dining room furniture (casegoods) and certain leather upholstery offerings from several foreign plants, primarily in Vietnam. Approximately 80% of our wholesale revenues are derived from products that are manufactured in the United States using a mix of domestic and globally sourced components and raw materials. ### Sale of the Assets of Zenith Freight Lines, LLC During the first quarter of 2022, we entered into a definitive agreement to sell substantially all of the assets of our wholly-owned subsidiary, Zenith, to J.B. Hunt for $86,939 in cash (see Note 18 to the Consolidated Financial Statements for additional information regarding the sale of Zenith). On February 28, 2022 the transaction was completed with us receiving $85,521 after the payment of $418 in certain transaction costs and the funding of $1,000 held in escrow, which was released to us on the first anniversary of the sale. The final purchase price was subject to a customary post-closing working capital adjustment, which was settled in the amount of $987 resulting in a pre-tax gain of $52,534 on this transaction. As a result of the sale, the operations of our former logistical services segment, which consisted entirely of the operations of Zenith, are presented in the accompanying condensed consolidated statements of income and in the following discussion as discontinued operations. ### Cybersecurity Incident On July 10, 2024, we detected unauthorized occurrences on a portion of our information technology (IT) systems. Upon detecting the unauthorized occurrences, we immediately began taking steps to contain, assess and remediate the cybersecurity incident, including beginning an investigation with leading external cybersecurity specialists, activating our incident response plan, and shutting down some systems. As a result of these and other measures, we believe the threat actor was ejected from our IT systems on July 10, 2024. After we shut down some of our systems, we experienced disruption to certain of our operations, including interrupted manufacturing at our domestic plants and delayed order fulfillment for our retail network and delay of some wholesale shipments. Within a few days of the incident, we were able to resume retail order fulfillment and caught up on fulfilling wholesale orders that were delayed as a result of the cybersecurity incident. We have fully restored the IT systems and data and our investigation has not found evidence that any of our core operating systems for manufacturing, wholesale and retail order processing and fulfillment, or financial reporting were impacted. While we believe the impacts were not material to our financial condition and results of operations for the fiscal year, we estimate that between $1,000 and $2,000 of sales were lost due to the shutdown during the cybersecurity incident. During the third quarter of 2024, we also incurred legal and remediation costs related to the incident of approximately $98 which are included in selling, general and administrative expenses. In addition, cost of goods sold for fiscal 2024 includes $609 for wages paid to hourly production employees during the work stoppage resulting from the cybersecurity incident. Because no inventory was produced during the temporary shutdown of our manufacturing operations, these wages were charged directly to expense. We are seeking reimbursement of certain costs, expenses and losses stemming from the cybersecurity incident and have submitted a claim to our cybersecurity insurer. We expect final resolution and payment of the claim during the first half of 2025. ### Analysis of Continuing Operations The following discussion provides an analysis of our results of operations and reasons for material changes therein for fiscal year 2024 as compared to fiscal year 2023. For additional analysis of the fiscal year 2023 results as compared to fiscal year 2022, see “Analysis of Operations” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on January 25, 2024. Net sales revenue, cost of furniture and accessories sold, selling, general and administrative (“SG&A”) expense, other charges, and income from operations were as follows for the years ended November 30, 2024, November 25, 2023 and November 26, 2022: | | 2024\* | | 2023 | | 2022 | | Comparative Change 2024 vs 2023 Dollars | Percent | 2023 vs 2022 Dollars | Percent | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | --- | | Net sales of furniture and accessories | $329,923 | 100.0% | $390,136 | 100.0% | $485,601 | 100.0% | $(60,213) | -15.4% | $(95,465) | -19.7% | | Cost of furniture and accessories sold | 150,508 | 45.6% | 183,648 | 47.1% | 237,262 | 48.9% | (33,140) | -18.0% | (53,614) | -22.6% | | Gross profit | 179,415 | 54.4% | 206,488 | 52.9% | 248,339 | 51.1% | (27,073) | -13.1% | (41,851) | -16.9% | | SG&A | 187,527 | 56.8% | 205,227 | 52.6% | 218,069 | 44.9% | (17,700) | -8.6% | (12,842) | -5.9% | | Asset impairment charges | 5,515 | 1.7% | - | 0.0% | - | 0.0% | 5,515 | NM | - | NM | | Loss on contract abandonment | 1,240 | 0.4% | - | 0.0% | - | 0.0% | 1,240 | NM | - | NM | | Loss upon realization of cumulative translation adjustment | 962 | 0.3% | - | 0.0% | - | 0.0% | 962 | NM | - | NM | | Restructuring charges | 440 | 0.1% | - | 0.0% | - | 0.0% | 440 | NM | - | NM | | Goodwill impairment charge | - | 0.0% | 5,409 | 1.4% | - | 0.0% | (5,409) | -100.0% | 5,409 | NM | | Gain on revaluation of contingent consideration | - | 0.0% | 1,013 | 0.3% | - | 0.0% | (1,013) | -100.0% | 1,013 | NM | | Gain on sale of real estate | - | 0.0% | - | 0.0% | 4,595 | 0.9% | - | 0.0% | (4,595) | -100.0% | | Income (loss) from continuing operations | $(16,269) | -2.4% | $(3,135) | -0.9% | $34,865 | 7.2% | $(13,134) | 418.9% | $(38,000) | N/M | \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. Our consolidated net sales by segment were as follows: | Sales Revenue | 2024\* | 2023 | 2022 | Comparative Change 2023 vs 2022 Dollars | Percent | 2022 vs 2021 Dollars | Percent | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Wholesale sales of furniture and accessories | $207,462 | $248,911 | $324,569 | $(41,449) | -16.7% | $(75,658) | -23.3% | | Less: Sales to retail segment | (87,021) | (103,519) | (125,889) | 16,498 | -15.9% | 22,370 | -17.8% | | Wholesale sales to external customers | 120,441 | 145,392 | 198,680 | (24,951) | -17.2% | (53,288) | -26.8% | | Retail sales of furniture and accessories | 204,563 | 235,940 | 285,119 | (31,377) | -13.3% | (49,179) | -17.2% | | Corporate & Other - Noa Home | 4,919 | 8,804 | 1,802 | (3,885) | -44.1% | 7,002 | 388.6% | | Consolidated net sales of furniture and accessories | $329,923 | $390,136 | $485,601 | $(60,213) | -15.4% | $(95,465) | -19.7% | \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. Total sales revenue for the year ended November 30, 2024, decreased $60,213 or approximately 15% from the prior year period primarily due to decreases in wholesale shipments to both the open market and the BHF store network and decreases in retail delivered sales. Gross margins for the year ended November 30, 2024 increased 150 basis points from 2023. Included in the current year gross margin are increased inventory valuation charges of $1,729 in the wholesale segment, $472 in the retail segment and $500 in the Noa Home operation, and unproductive labor costs of $609 incurred during the temporary shutdown resulting from the cybersecurity incident. Excluding these charges, our consolidated gross margin would have been 55.4%. SG&A expenses as a percentage of sales for the year ended November 30, 2024 increased 420 basis points from 2023 primarily due to the deleverage of fixed costs caused by lower sales volumes. During fiscal 2024, we recognized charges of $5,515 for asset impairments, $1,240 resulting from a contract abandonment, $962 from the realization of cumulative translation losses on Noa Home, and a restructuring charge of $440. This restructuring charge resulted from a workforce reduction which we expect will result in annual savings of approximately $2,500 beginning in 2025, mostly in SG&A expenses. See Note 14 to our consolidated financial statements for additional information regarding these charges. During fiscal 2023, we recognized a goodwill impairment charge of $5,409 and a gain of $1,013 resulting from the write-down of our contingent consideration obligation both of which are associated with the acquisition of Noa Home. See Note 3 to the consolidated financial statements. During the year ended November 26, 2022, we recognized a gain of $4,595 from the sale of the real estate at a former retail location in Houston, Texas. Certain other items affecting comparability between fiscal 2024 and 2023 are discussed below in “Other Items Affecting Net Income”. ### Segment Information We have strategically aligned our business into two reportable segments as defined in ASC 280, *Segment Reporting*, and as described below: - **Wholesale.** The wholesale home furnishings segment is involved principally in the design, manufacture, sourcing, sale and distribution of furniture products to a network of Bassett stores (Company-owned and licensee-owned retail stores) and independent furniture retailers. Our wholesale segment includes our wood and upholstery operations, which includes Lane Venture. - **Retail – Company-owned stores.** Our retail segment consists of Company-owned stores and includes the revenues, expenses, assets and liabilities and capital expenditures directly related to these stores and the Company-owned distribution network utilized to deliver products to our retail customers. In addition to the two reportable segments described above, we include our remaining business activities and assets in a reconciling category known as Corporate and other. This category includes the shared costs of corporate functions such as treasury and finance, information technology, accounting, human resources, legal and others, including certain product development and marketing functions benefitting both wholesale and retail operations. In addition to property and equipment and various other assets associated with the shared corporate functions, the identifiable assets of Corporate and other include substantially all of our cash and our investments in CDs. We consider our corporate functions to be other business activities and have aggregated them with any of our operating segments that do not meet the requirements to be reportable segments. As of and for the periods ended November 30, 2024, November 25, 2023 and November 26, 2022, the only such operating segment included in Corporate and other is Noa Home, which was acquired on September 2, 2022. All sales reported in our Corporate and other category are attributable to Noa Home, which generated substantially all of its sales outside of the United States. During the second fiscal quarter of 2024 we concluded that Noa Home was not likely to achieve profitability in the foreseeable future and have ceased operations as of November 30, 2024 by selling the remaining inventory in an orderly fashion over the second half of fiscal 2024. Inter-company net sales elimination represents the elimination of wholesale sales to our Company-owned stores. Inter-company income elimination includes the embedded wholesale profit in the Company-owned store inventory that has not been realized. These profits will be recorded when merchandise is delivered to the retail consumer. The inter-company income elimination also includes rent paid by our retail stores occupying Company-owned real estate. Our former logistical services segment which represented the operations of Zenith is presented as a discontinued operation. ### Reconciliation of Segment Results to Consolidated Results of Operations To supplement the financial measures prepared in accordance with GAAP, we present gross profit by segment inclusive of the effects of intercompany sales by our wholesale segment to our retail segment. Because these intercompany transactions are not eliminated from our segment presentations and because we do not present gross profit as a measure of segment profitability in the accompanying condensed consolidated financial statements, the presentation of gross profit by segment is considered to be a non-GAAP financial measure. In addition, certain special gains or charges that are included in consolidated income (loss) before income taxes are not included in the measures of segment profitability. The reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP is presented below along with the effects of various other intercompany eliminations on our consolidated results of operations. | | Year Ended November 30, 2024 Non-GAAP Presentation Wholesale | Retail | Corporate & Other | Eliminations | | Special Items | | Non- Operating | GAAP Presentation Consolidated | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net sales of furniture and accessories | $207,462 | $204,563 | $4,919 | $(87,021) | (1) | $- | | $- | $329,923 | | Cost of furniture and accessories sold | 139,393 | 95,728 | 2,803 | (87,416) | (2) | - | | - | 150,508 | | Gross profit | 68,069 | 108,835 | 2,116 | 395 | (3) | - | | - | 179,415 | | SG&A expense | 42,712 | 115,439 | 30,572 | (1,196) | (4) | - | | - | 187,527 | | Asset impairment charges | - | - | - | - | | 5,515 | (5) | - | 5,515 | | Loss on contract abandonment | - | - | - | - | | 1,240 | (6) | - | 1,240 | | Loss upon realization of cumulative translation adjustment | - | - | - | - | | 962 | (7) | - | 962 | | Restructuring charges | - | - | - | - | | 440 | (8) | - | 440 | | Income (loss) from continuing operations | 25,357 | (6,604) | (28,456) | 1,591 | | 8,157 | | - | (16,269) | | Interest income | - | - | - | - | | - | | 2,673 | 2,673 | | Interest expense | - | - | - | - | | - | | (30) | (30) | | Other loss, net | - | - | - | - | | - | | (744) | (744) | | Income (loss) from continuing operations before income taxes | $25,357 | $(6,604) | $(28,456) | $1,591 | | $8,157 | | $1,899 | $(14,370) | | | Year Ended November 25, 2023 Non-GAAP Presentation Wholesale | Retail | Corporate & Other | Eliminations | | Special Items | | Non- Operating | GAAP Presentation Consolidated | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net sales of furniture and accessories | $248,911 | $235,940 | $8,804 | $(103,519) | (1) | $- | | $- | $390,136 | | Cost of furniture and accessories sold | 171,394 | 111,769 | 4,002 | (103,517) | (2) | - | | - | 183,648 | | Gross profit | 77,517 | 124,171 | 4,802 | (2) | (3) | - | | - | 206,488 | | SG&A expense | 46,818 | 124,707 | 34,728 | (1,026) | (4) | - | | - | 205,227 | | Goodwill impairment charge | - | - | - | - | | 5,409 | (9) | - | 5,409 | | Gain on revaluation of contingent consideration | - | - | - | - | | 1,013 | (10) | - | 1,013 | | Income (loss) from continuing operations | 30,699 | (536) | (29,926) | 1,024 | | 4,396 | | - | (3,135) | | Interest income | - | - | - | - | | - | | 2,528 | 2,528 | | Interest expense | - | - | - | - | | - | | (22) | (22) | | Other loss, net | - | - | - | - | | - | | (1,859) | (1,859) | | Income (loss) from continuing operations before income taxes | $30,699 | $(536) | $(29,926) | $1,024 | | $4,396 | | $647 | $(2,488) | | | Year Ended November 26, 2022 Non-GAAP Presentation Wholesale | Retail | Corporate & Other | Eliminations | | Special Items | | Non- Operating | GAAP Presentation Consolidated | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net sales of furniture and accessories | $324,569 | $285,119 | $- | $(124,087) | (1) | $- | | $- | $485,601 | | Cost of furniture and accessories sold | 225,300 | 135,699 | - | (123,737) | (2) | - | | - | 237,262 | | Gross profit | 99,269 | 149,420 | - | (350) | (3) | - | | - | 248,339 | | SG&A expense | 57,290 | 130,068 | 24,829 | 5,882 | (4) | - | | - | 218,069 | | Gain on sale of real estate | - | - | - | - | | 4,595 | | - | 4,595 | | Income (loss) from continuing operations | 41,979 | 19,352 | (24,829) | (6,232) | | 4,595 | (11) | | 34,865 | | Interest income | - | - | - | - | | - | | 302 | 302 | | Interest expense | - | - | - | - | | - | | (38) | (38) | | Other loss, net | - | - | - | - | | - | | (1,067) | (1,067) | | Income (loss) from continuing operations before income taxes | $41,979 | $19,352 | $(24,829) | $(6,232) | | $4,595 | | $(803) | $34,062 | 18 Notes to Segment Consolidation Table: (1) Represents the elimination of sales from our wholesale segment to our Company-owned BHF stores. (2) Represents the elimination of purchases by our Company-owned BHF stores from our wholesale segment. (3) Represents the change in the elimination of intercompany profit in inventory. (4) Represents the elimination of rent paid by our retail stores occupying Company-owned real estate. (5) Represents asset impairment charges of $2,887 and $727 in our retail and wholesale segments, respectively, a $1,827 charge for the impairment of the Noa Home trade name intangible asset, and a $74 charge for the impairment of Noa Home customized software. (6) Represents the charge for accruing the remaining minimum payments under a contract for logistical services in Riverside, CA which is no longer utilized. (7) Represents a charge for the realization of Noa Home's cumulative translation losses previously recorded in accumulated other comprehensive income due to the closure and substantially complete liquidation of that business. (8) Represents a charge for the accrual of severance pay due to restructuring. This is expected to be paid out through the second quarter of fiscal 2025. (9) Represents the charge for the full impairment of the goodwill associated with Noa Home. (10) Represents the gain resulting from the write-down of the contingent consideration payable on the acquisition of Noa Home. (11) Represents the gain on the sale of the real estate at a former retail location. ### Wholesale Segment Net sales, gross profit, SG&A expense and operating income for our Wholesale Segment were as follows for the fiscal years ended November 30, 2024, November 25, 2023 and November 26, 2022: | | 2024\* | | 2023 | | 2022 | | Comparative Change 2024 vs 2023 Dollars | Percent | 2023 vs 2022 Dollars | Percent | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net sales | $207,462 | 100.0% | $248,911 | 100.0% | $324,569 | 100.0% | $(41,449) | -16.7% | $(75,658) | -23.3% | | Gross profit (1) | 68,069 | 32.8% | 77,517 | 31.1% | 99,269 | 30.6% | (9,448) | -12.2% | (21,752) | -21.9% | | SG&A | 42,712 | 20.6% | 46,818 | 18.8% | 57,290 | 17.7% | (4,106) | -8.8% | (10,472) | -18.3% | | Income from operations | $25,357 | 12.2% | $30,699 | 12.3% | $41,979 | 12.9% | $(5,342) | -17.4% | $(11,280) | -26.9% | (1) Gross profit at the segment level is considered a Non-GAAP financial measure due to the included effects of intercompany transactions. Refer to the reconciliation of segment results to consolidated results of operations presented above. \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. Wholesale shipments by category for the fiscal years ended November 30, 2024, November 25, 2023 and November 26, 2022 are summarized below: | | 2024\* External | Intercompany | Total | | 2023 External | Intercompany | Total | | 2022 External | Intercompany | Total | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Bassett Custom Upholstery | $79,344 | $55,168 | $134,512 | 64.8% | $89,005 | $66,363 | $155,368 | 62.4% | $124,565 | $82,437 | $207,002 | 63.8% | | Bassett Leather | 15,705 | 1,919 | 17,624 | 8.5% | 26,701 | 1,171 | 27,872 | 11.2% | 35,953 | 76 | 36,029 | 11.1% | | Bassett Custom Wood | 14,075 | 16,674 | 30,749 | 14.8% | 17,357 | 20,070 | 37,427 | 15.0% | 22,534 | 24,764 | 47,298 | 14.6% | | Bassett Casegoods | 11,317 | 13,260 | 24,577 | 11.8% | 12,329 | 15,915 | 28,244 | 11.3% | 15,628 | 18,612 | 34,240 | 10.5% | | Total | $120,441 | $87,021 | $207,462 | 100.0% | $145,392 | $103,519 | $248,911 | 100.0% | $198,680 | $125,889 | $324,569 | 100.0% | \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. #### Fiscal 2024 as Compared to Fiscal 2023 Net sales for the year ended November 30, 2024 decreased $41,449 or 17% from fiscal 2023 due primarily to a 19% decrease in shipments to the open market, a 16% decrease in shipments to our retail store network and a 3% decrease in Lane Venture shipments. Gross margins for the year ended November 30, 2024 increased 170 basis points over fiscal 2023 year primarily due to the expected improvement in the Bassett Leather business. As the Bassett Leather product line is internationally sourced with extended lead times, we received significant amounts of inventory during the second and third quarters of 2022 just as product demand was weakening due to the market downturn in home furnishings. Also, the ocean freight costs associated with the majority of the product received was at significantly higher costs than are currently being realized on current product receipts. Margins in our Bassett Casegoods business also improved as expected primarily due to shipping more product that contained lower in-bound freight costs partially offset by increased inventory valuation charges recorded in the second quarter of fiscal 2024 as we have been more aggressive in selling certain slow-moving products. These improvements were partially offset by slightly lower margins in the Bassett Custom Upholstery business due to deleverage of fixed costs from lower sales volumes. SG&A expenses as a percentage of sales increased 180 basis points primarily due to reduced leverage of fixed costs from decreased sales. The dollar value of our wholesale backlog, representing orders received but not yet shipped to the BHF store network or independent dealers, was $21,750 at November 30, 2024 and $18,478 at November 25, 2023. ***Retail Segment – Company Owned Stores*** Net sales, gross profit, SG&A expense, and operating income (loss) for our retail segment were as follows for the fiscal years ended November 30, 2024, November 25, 2023 and November 26, 2022: | | 2024\* | | 2023 | | 2022 | | Comparative Change 2024 vs 2023 Dollars | Percent | 2023 vs 2022 Dollars | Percent | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net sales | $204,563 | 100.0% | $235,940 | 100.0% | $285,119 | 100.0% | $(31,377) | -13.3% | $(49,179) | -17.2% | | Gross profit (1) | 108,835 | 53.2% | 124,171 | 52.6% | 149,420 | 52.4% | (15,336) | -12.4% | (25,249) | -16.9% | | SG&A | 115,439 | 56.4% | 124,707 | 52.9% | 130,068 | 45.6% | (9,268) | -7.4% | (5,361) | -4.1% | | Income (loss) from operations | $(6,604) | -3.2% | $(536) | -0.2% | $19,352 | 6.8% | $(6,068) | 1132.1% | $(19,888) | NM | (1) Gross profit at the segment level is considered a Non-GAAP financial measure due to the included effects of intercompany transactions. Refer to the reconciliation of segment results to consolidated results of operations presented above. \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. Retail sales by major product category for the fiscal years ended November 25, 2023, November 26, 2022 and November 27, 2021were as follows: | | 2024\* | | 2023 | | 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Bassett Custom Upholstery | $111,943 | 54.7% | $134,000 | 56.8% | $163,755 | 57.4% | | Bassett Leather | 4,990 | 2.4% | 1,951 | 0.8% | 1,707 | 0.6% | | Bassett Custom Wood | 32,201 | 15.7% | 36,732 | 15.6% | 43,208 | 15.2% | | Bassett Casegoods | 26,179 | 12.8% | 32,252 | 13.7% | 40,146 | 14.1% | | Accessories, mattresses & other (1) | 29,250 | 14.3% | 31,005 | 13.1% | 36,303 | 12.7% | | Total | $204,563 | 100.0% | $235,940 | 100.0% | $285,119 | 100.0% | (1) Includes the sale of goods other than Bassett-branded products, such as accessories and bedding, and also includes the sale of furniture protection plans. \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. #### Fiscal 2024 as Compared to Fiscal 2023 Net sales for the year ended November 30, 2024 decreased $31,377 or 13% from fiscal 2023. Written sales (the value of sales orders taken but not delivered) declined 2.8% from fiscal 2023. Gross margin for the year ended November 30, 2024 improved 60 basis points over fiscal 2023 primarily due to higher margins on both in-line and clearance goods partially offset by additional inventory valuation charges in the second quarter of 2024 due to our strategy to be more aggressive in selling clearance goods to better control inventory levels. SG&A expenses as a percentage of sales for the year ended November 30, 2024 increased 350 basis points primarily due to decreased leverage of fixed costs from lower sales volumes. Retail backlog at November 30, 2024 was $37,053 compared to $30,902 at November 25, 2023. ### Corporate and Other In addition to the two reportable segments discussed above, we include our remaining business activities and assets in a reconciling category known as Corporate and other, which includes the shared costs of various corporate functions along with any operating segments that do not meet the requirements to be reportable segments. Therefore, Noa Home is included within the Corporate and other reconciling category and accounts for all of the sales and gross profit within this reconciling category. Revenues, costs and expenses of Corporate and other for the fiscal years ended November 30, 2024, November 25, 2023 and November 26, 2022 are as follows: | | 2024\* | | 2023 | | 2022 | | Comparative Change 2024 vs 2023 Dollars | Percent | 2023 vs 2022 Dollars | Percent | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net sales | $4,919 | 100.0% | $8,804 | 100.0% | $1,802 | 100.0% | $(3,885) | -44.1% | $7,002 | 388.6% | | Gross profit | 2,116 | 43.0% | 4,802 | 54.5% | 830 | 46.1% | (2,686) | -55.9% | 3,972 | 478.6% | | SG&A | 30,572 | 621.5% | 34,728 | 394.5% | 31,827 | 1766.2% | (4,156) | -12.0% | 2,901 | 9.1% | | Income (loss) from operations | $(28,456) | -578.5% | $(29,926) | -339.9% | $(30,997) | -1720.1% | $1,470 | -4.9% | $1,071 | -3.5% | \*53 weeks for fiscal 2024 as compared with 52 weeks for fiscal 2023 and 2022. #### Fiscal 2024 as Compared to Fiscal 2023 Sales and gross profit for the year ended November 30, 2024 declined from fiscal 2023 as we concluded our wind-down of Noa Home’s operations and sold off the remaining inventory during the second half of fiscal 2024. Included in the gross profit is an inventory valuation charge of $500 recognized during the second quarter of 2024 due to our decision to cease operations at Noa Home. The $4,156 decrease in SG&A expenses was primarily due to decreased advertising and warehouse costs for Noa Home as a result of the cessation of operations and decreased corporate overhead spending from better expense management. ### Discontinued Operations - Logistical Services Revenues, operating expenses and income from operations for our logistical services segment were as follows for the fiscal years ended November 30, 2024, November 25, 2023 and November 26, 2022: | | 2024\* | | 2023 | | 2022 | | Comparative Change 2023 vs 2022 Dollars | Percent | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Logistical services revenue | $- | 0.0% | $- | 0.0% | $16,776 | 100.0% | $(16,776) | -100.0% | | Cost of logistical services | - | 0.0% | - | 0.0% | 15,001 | 89.4% | (15,001) | -100.0% | | Other loss, net | - | 0.0% | - | 0.0% | (63) | -0.4% | 63 | -100.0% | | Income from discontinued operations | $- | 0.0% | $- | 0.0% | $1,712 | 10.2% | $(1,712) | -100.0% | 21 *Analysis of Discontinued Operations – Logistical Services* The amounts shown above represent the results of Zenith’s business transactions with third parties. Zenith only operated as a subsidiary of the Company for the first quarter of fiscal 2022, during which period Zenith charged Bassett $9,121 for logistical services provided to our wholesale segment. These shipping and handling costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. We entered into a service agreement with J.B. Hunt for the continuation of these services for a period of seven years following the sale of Zenith. Subsequent to the sale, we incurred $22,721, $26,125 and $27,604 of expense during fiscal 2024, 2023 and 2022, respectively, for the performance of logistical services by J.B. Hunt. ### Other Items Affecting Net Income (Loss) Other items affecting net income (loss) for fiscal 2024, 2023 and 2022 are as follows: | | 2024 | 2023 | 2022 | | --- | ---: | ---: | ---: | | Interest income (1) | $2,673 | $2,528 | $302 | | Interest expense (2) | (30) | (22) | (38) | | Net periodic pension costs (3) | (430) | (496) | (489) | | Net gains (cost) of company-owned life insurance (4) | 302 | (572) | 161 | | Other | (616) | (791) | (739) | | Total other income (loss), net | $1,899 | $647 | $(803) | (1) Consists of interest income arising from our short-term investments and interest-bearing cash equivalents. The increase in interest income for fiscal 2024 as compared with fiscal 2023 was due primarily to higher interest rates paid on certificates of deposit. See Note 4 to the Consolidated Financial Statements for additional information regarding our investments in certificates of deposit. (2) Interest expense is attributable to finance leases for computer and office equipment. See Note 15 to the Consolidated Financial Statements for additional information regarding our leases. (3) Represents the portion of net periodic pension costs not included in income from operations. See Note 10 to the Consolidated Financial Statements for additional information related to our defined benefit pension plans. (4) Includes a gain arising from death benefits from Company-owned life insurance of $1,441 in fiscal 2022. ### Provision for Income taxes We recorded an income tax benefit of $4,675 on the loss from continuing operations for 2024. In 2023, we recorded income tax expense on the loss from continuing operations of $683 and in 2022, we recorded $8,702 of income tax expense on the income from continuing operations. Our effective tax rate of 32.5% for 2024 differs from the federal statutory rate of 21.0% due to the increases in the valuation allowance placed on deferred tax assets resulting from pre-tax losses in foreign tax jurisdictions associated with Noa Home, the nondeductible impairment of the Noa Home tradename, the tax benefit recorded for the capital loss associated with the cumulative investment in Noa Home due to the shutdown of the operations, and the effects of state income taxes and various permanent differences. Our effective tax rate of (27.5%) for 2023 differs from the federal statutory rate of 21.0% due to the non-taxable goodwill impairment and non-taxable gain on revaluation of contingent consideration both of which are associated with the acquisition of Noa Home, increases in the valuation allowance placed on deferred tax assets resulting from pre-tax losses in foreign tax jurisdictions associated with Noa Home, and the effects of state income taxes and various permanent differences. We have net deferred tax assets of $6,867 as of November 30, 2024, which, upon utilization, are expected to reduce our cash outlays for income taxes in future years. It will require approximately $31,700 of future taxable income to utilize our net deferred tax assets. ### Liquidity and Capital Resources We are committed to maintaining a strong balance sheet in order to weather difficult industry conditions, to allow us to take advantage of opportunities as market conditions improve, and to execute our long-term retail strategies. #### Cash Flows Cash provided by operations for the year ended November 30, 2024 was $4,050 compared to cash provided by operations of $18,724 for the year ended November 25, 2023, representing a decrease of $14,674 in cash flows from operations. This decrease was primarily the result of changes in working capital due to the timing impact of expenditures as a result of an additional week in the first quarter of 2024 coupled with larger net loss in fiscal 2024. Our overall cash position declined $12,993 during fiscal 2024. During fiscal 2024, we spent $5,211 on purchases of property and equipment primarily consisting of the upfit of the new Tampa, Florida and Houston, Texas stores that opened in the first quarter of 2024, final payments on the Austin, Texas store remodel, update of the façade of the Greensboro, North Carolina store location and expenditures related to various information technology and manufacturing plant projects. During the fourth quarter of fiscal 2024 ,we purchased a $2,500 CD which has been pledged as collateral against our merchant services agreement with a bank. We also paid $6,654 in dividends during fiscal 2024. During 2024, we spent $1,420 to repurchase shares under our existing stock repurchase program as compared to $4,176 in 2023. As of November 30, 2024, $20,403 remains available for future purchases under our stock repurchase plan. With cash and cash equivalents and short-term investments totaling $59,911 on hand at November 30, 2024, expected future operating cash flows and the availability under our credit line noted below, we believe we have sufficient liquidity to fund operations for the foreseeable future. #### Debt and Other Obligations #### Bank Credit Facility On May 15, 2024, we entered into the Eighth Amended and Restated Credit Agreement with our bank (the “Credit Facility”). This Credit Facility provides for a line of credit of up to $25,000. At November 30, 2024, we had $6,013 outstanding under standby letters of credit against our line. The line bears interest at the One-Month Term Secured Overnight Financing Rate (“One-Month Term SOFR”) plus 1.75% and is secured by our accounts receivable and inventory. Our bank charges a fee of 0.25% on the daily unused balance of the line, payable quarterly. Under the terms of the Credit Facility, Consolidated Minimum Tangible Net Worth (as defined in the Credit Facility) shall at no time be less than $120,000. In addition, we must maintain the following financial covenants, measured quarterly on a rolling twelve-month basis and commencing as of the end of the first fiscal quarter after the first date that the used commitment (the sum of any outstanding advances plus standby letters of credit) equals or exceeds $8,250: - Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.2 times and - Consolidated Lease Adjusted Leverage to EBITDAR Ratio (as defined in the Credit Facility) not to exceed 3.35 times. Since our used commitment was less than $8,250 at November 30, 2024, we were not required to test the Consolidated Fixed Charge Coverage Ratio or the Consolidated Lease Adjusted Leverage to EBITDAR Ratio. Had we been required to test those ratios, we would not have been able to achieve the required levels for either of these ratios. Consequently, our availability under the Credit Facility is currently limited to an additional $2,237. We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of certain of our licensee-owned stores, and we lease land and buildings at various locations throughout the continental United States for warehouse space used in our retail segment. We also lease local delivery trucks used in our retail segment. The total future minimum lease payments for leases with terms in excess of one year at November 30, 2024 is $128,530 the present value of which is $106,445 and is included in our accompanying consolidated balance sheet at November 30, 2024. We were contingently liable under licensee lease obligation guarantees in the amount of $5,131 at November 30, 2024. The remaining terms under these lease guarantees range from approximately one to five years. See Note 15 to our consolidated financial statements for a schedule of future cash payments on our lease obligations and additional details regarding our leases and lease guarantees. We provide post-employment benefits to certain current and former executives and management level employees of the Company. Included among these benefits are two defined-benefit plans with a combined projected benefit obligation of $6,917 at November 30, 2024. See Note 10 to our consolidated financial statements for a projection of future benefit payments under these plans from 2025 through 2034. We also have deferred compensation plans with a total liability of $5,055 at November 30, 2024, the current portion of which is $330. See Note 10 to our consolidated financial statements for additional information regarding these plans. #### Dividends and Share Repurchases During fiscal 2024, we declared and paid four quarterly dividends totaling $6,654, or $0.76 per share. During fiscal 2024, we repurchased 101,305 shares of our stock for $1,420 under our share repurchase program. The weighted-average effect of these share repurchases on basic earnings per share from continuing operations was less than $0.01 per share. On March 9, 2022, our Board of Directors increased the remaining limit of the repurchase plan to $40,000. The approximate dollar value that may yet be purchased pursuant to our stock repurchase program as of November 30, 2024 was $20,403. #### Capital Expenditures We currently anticipate that total capital expenditures for fiscal 2025 will be between $8 million and $12 million, which will be used for remodeling various retail stores and additional investments in information technology, including enhancements to our website. Our capital expenditure and working capital requirements in the foreseeable future may change depending on many factors, including but not limited to the overall performance of the store program, our rate of growth, our operating results and any adjustments in our operating plan needed in response to industry conditions, competition or unexpected events. We believe that our existing cash, together with cash from operations, will be sufficient to meet our capital expenditure and working capital requirements for the foreseeable future. ### Fair Value Measurements We account for items measured at fair value in accordance with ASC Topic 820, *Fair Value Measurements and Disclosures*. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy: *Level 1 Inputs–* Quoted prices for identical instruments in active markets. *Level 2 Inputs–* Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. *Level 3 Inputs–* Instruments with primarily unobservable value drivers. We believe that the carrying amounts of our current assets and current liabilities approximate fair value due to the short-term nature of these items. Our primary non-recurring fair value estimates, typically involving the valuation of business acquisitions (see Note 3 to the Consolidated Financial Statements), goodwill impairments (see Note 8 to the Consolidated Financial Statements) and asset impairments (see Note 14 to the Consolidated Financial Statements) have utilized Level 3 inputs. ### Off-Balance Sheet Arrangements We utilize stand-by letters of credit in the procurement of certain goods in the normal course of business. We lease land and buildings that are primarily used in the operation of our retail BHF stores and distribution facilities as well as certain manufacturing facilities in our upholstery operations. We have guaranteed certain lease obligations of licensee operators as part of our retail strategy. See Note 15 to the Consolidated Financial Statements, included in Item 8 of this Annual Report on Form 10-K, for further discussion of lease guarantees, including descriptions of the terms of such commitments and methods used to mitigate risks associated with these arrangements. ### Contingencies We are involved in various claims and litigation as well as environmental matters, which arise in the normal course of business. Although the final outcome of these legal and environmental matters cannot be determined, based on the facts presently known, it is our opinion that the final resolution of these matters will not have a material adverse effect on our financial position or future results of operations. ### Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which requires that certain estimates and assumptions be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. We use our best judgment in valuing these estimates and may, as warranted, solicit external advice. Estimates are based on current facts and circumstances, prior experience and other assumptions believed to be reasonable. The following critical accounting policies, some of which are impacted significantly by judgments, assumptions and estimates, affect our consolidated financial statements. *Revenue Recognition* - We recognize revenue when we transfer promised goods to our customers in an amount that reflects the consideration that we expect to receive in exchange for those goods. For our wholesale and retail segments, revenue is recognized when the risks and rewards of ownership and title to the product have transferred to the buyer. At wholesale, transfer occurs and revenue is recognized upon the shipment of goods to independent dealers and licensee-owned BHF stores. We offer payment terms varying from 30 to 60 days for wholesale customers. Estimates for returns and allowances have been recorded as a reduction of revenue based on our historical return patterns. The contracts with our licensee store owners do not provide for any royalty or license fee to be paid to us. At retail, transfer occurs and revenue is recognized upon delivery of goods to the customer. We typically collect a significant portion of the purchase price as a customer deposit upon order, with the balance typically collected upon delivery. These deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to $25,742 and $22,788 as of November 30, 2024 and November 25, 2023, respectively. Substantially all of the customer deposits held at November 25, 2023 related to performance obligations satisfied during fiscal 2024 and have therefore been recognized in revenue for the year ended November 30, 2024. Estimates for returns and allowances have been recorded as a reduction of revenue based on our historical return patterns. We also sell furniture protection plans to our retail customers on behalf of a third party which is responsible for the performance obligations under the plans. Revenue from the sale of these plans is recognized upon delivery of the goods net of amounts payable to the third-party service provider. *Allowance for credit losses* - We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments. Our accounts receivable reserves were $1,097 and $535 at November 30, 2024 and November 25, 2023, respectively, representing 7.7% and 3.7% of our gross accounts receivable balances at those dates, respectively. The allowance for credit losses is based on a review of specifically identified customer accounts in addition to an overall aging analysis which is applied to accounts pooled on the basis of similar risk characteristics. Judgments are made with respect to the collectibility of accounts receivable within each pool based on historical experience, current payment practices and current economic trends based on our expectations over the expected life of the receivables, which is generally ninety days or less. Although actual losses have not differed materially from our previous estimates, future losses could differ from our current estimates. Unforeseen events such as a licensee or customer bankruptcy filing could have a material impact on our results of operations. *Inventories* - Inventories accounted for under the first-in, first out (“FIFO”) method are stated at the lower of cost or net realizable value, and inventory accounted for under the last-in, first out method (“LIFO”) is stated at the lower of cost or market. Cost is determined for domestic furniture inventories, excluding outdoor furniture products, using the LIFO method. The cost of imported inventories, domestic outdoor furniture products and Noa Home product inventories is determined on a FIFO basis. We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand and market conditions. Our reserves for excess and obsolete inventory were $5,395 and $5,183 at November 30, 2024 and November 25, 2023, respectively, representing 8.9% and 7.6%, respectively, of our inventories on a LIFO basis. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. *Goodwill –* Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets and liabilities and identifiable intangible assets of businesses acquired. The acquisition of assets and liabilities and the resulting goodwill is allocated to the respective reporting unit: Wood, Upholstery, Retail – Company-Owned Stores, and Noa Home. We review goodwill at the reporting unit level annually for impairment or more frequently if events or circumstances indicate that assets might be impaired. In accordance with ASC Topic 350, *Intangibles – Goodwill & Other,* we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test described in ASC Topic 350 (as amended by Accounting Standards Update No. 2017-04, *Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment*). The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary and our goodwill is considered to be unimpaired. However, if based on our qualitative assessment we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we will proceed with performing the quantitative evaluation process. For the annual test of goodwill performed as of the beginning of the fourth quarter of fiscal 2024, we performed the qualitative assessment as described above with respect to our upholstery reporting unit and concluded that there was no impairment of the goodwill allocated to that reporting unit as of November 30, 2024. For the annual test of the goodwill performed as of the beginning of the fourth quarter of fiscal 2023, we concluded that there was no impairment of the goodwill allocated to our upholstery reporting unit, however with respect to our Noa Home reporting unit, we proceeded to the quantitative test and concluded that the goodwill allocated to that reporting unit as of November 25, 2023 was fully impaired as the difficult environment for companies selling furniture on the web resulted in Noa Home performing well below initial projections and expectations. For the annual test of goodwill performed as of the beginning of the fourth fiscal quarter of 2022, we performed the qualitative assessment as described above and concluded that there was no impairment of our goodwill as of November 26, 2022. The quantitative evaluation compares the carrying value of each reporting unit that has goodwill with the estimated fair value of the respective reporting unit. Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, a goodwill impairment charge will be recognized in the amount by which the reporting unit’s carrying amount exceeds its fair value, but not to exceed the total goodwill assigned to the reporting unit. The determination of the fair value of our reporting units is based on a combination of a market approach, that considers benchmark company market multiples, an income approach, that utilizes discounted cash flows for each reporting unit and other Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, *Fair Value Measurements and Disclosure*, and, in the case of our retail reporting unit, a cost approach that utilizes estimates of net asset value. The cash flows used to determine fair value are dependent on a number of significant management assumptions such as our expectations of future performance and the expected future economic environment, which are partly based upon our historical experience. Our estimates are subject to change given the inherent uncertainty in predicting future results. Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates that would be utilized by a hypothetical market participant. As part of the goodwill impairment testing, we also consider our market capitalization in assessing the reasonableness of the combined fair values estimated for our reporting units. While we believe such assumptions and estimates are reasonable, the actual results may differ materially from the projected amounts. *Other Intangible Assets –* Intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but are tested for impairment annually or between annual tests when an impairment indicator exists. The recoverability of indefinite-lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carrying value of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded. During fiscal 2024, as a result of our decision to cease operations at Noa Home, we recognized a charge of $1,827 to fully impair the Noa Home trade name intangible asset. At November 30, 2024, our indefinite-lived intangible asset other than goodwill consisted of the trade name acquired in the acquisition of Lane Venture and had a carrying value of $6,848. Definite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. We estimate the useful lives of our intangible assets and ratably amortize the value over the estimated useful lives of those assets. If the estimates of the useful lives should change, we will amortize the remaining book value over the remaining useful lives or, if an asset is deemed to be impaired, a write-down of the value of the asset may be required at such time. At November 30, 2024 our definite-lived intangible assets consist of customer relationships acquired in the acquisition of Lane Venture with a carrying value of $120. *Impairment of Long-Lived Assets* - We periodically evaluate whether events or circumstances have occurred that indicate long-lived assets may not be recoverable or that the remaining useful life may warrant revision. When such events or circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use of the asset. In the event the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. When analyzing our real estate properties for potential impairment, we consider such qualitative factors as our experience in leasing and selling real estate properties as well as specific site and local market characteristics. Upon the closure of a Bassett Home Furnishings store, we generally write off all tenant improvements which are only suitable for use in such a store. Right of use assets under operating leases are written down to their estimated fair value. Our estimates of the fair value of the impaired right of use assets include estimates of discounted cash flows based upon current market rents and other inputs which we consider to be Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurement and Disclosure. ### Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements regarding the impact or potential impact of recent accounting pronouncements upon our financial position and results of operations. ## Market risk As filed, 2,995 characters. We are exposed to market risk from changes in the value of foreign currencies. Substantially all of our purchases outside of North America are denominated in U.S. dollars. Therefore, we believe that gains or losses resulting from changes in the value of foreign currencies relating to foreign purchases not denominated in U.S. dollars would not be material to our results from operations in fiscal 2024. We were also exposed to foreign currency market risk through our investment in Noa Home. Our investment in Noa Home was subject to changes in the value of the Canadian dollar versus the U.S. dollar. Additionally, Noa Home was exposed to other local currency fluctuation risk through its operations in Australia, Singapore, the United States and the United Kingdom. During fiscal 2024, we recognized a charge of $962 resulting from the realization of Noa Home’s cumulative translation losses that were previously carried in accumulated other comprehensive income. We are exposed to market risk from changes in the cost of raw materials used in our manufacturing processes, principally wood, woven fabric, and foam products. The cost of foam products, which are petroleum-based, is sensitive to changes in the prices of oil and refined petroleum materials. We are also exposed to commodity price risk related to diesel fuel prices for fuel used in our retail segment for home delivery as well as through amounts we are charged for logistical services by our service providers. We manage our exposure to that risk primarily through the application of fuel surcharges to our customers. We have potential exposure to market risk related to conditions in the commercial real estate market. Our retail real estate holdings of $24,127 and $24,279 at November 30, 2024 and November 25, 2023, respectively, for Company-owned stores, consisting of eight locations with a total of 203,465 square feet of space, could suffer significant impairment in value if we are forced to close additional stores and sell or lease the related properties during periods of weakness in certain markets. Additionally, if we are required to assume responsibility for payment under the lease obligations of $5,131 and $1,845 which we have guaranteed on behalf of licensees as of November 30, 2024 and November 25, 2023, respectively, we may not be able to secure sufficient sub-lease income in the current market to offset the payments required under the guarantees. We are also exposed to risk related to conditions in the commercial real estate rental market with respect to the right-of-use assets we carry on our balance sheet for leased retail store locations and warehouse facilities. At November 30, 2024, the unamortized balance of such right-of-use assets totaled $93,472. Should we have to close or otherwise abandon one of these leased locations, we could incur additional impairment charges if rental market conditions do not support a fair value for the right of use asset in excess of its carrying value. ## Controls and procedures As filed, 8,029 characters. As of the end of the period covered by this Annual Report on Form 10-K, our principal executive officer and principal financial officer have evaluated the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based upon their controls evaluation, our CEO and CFO have concluded that our Disclosure Controls are effective at a reasonable assurance level. We are responsible for establishing and maintaining adequate internal control over financial reporting in accordance with Exchange Act Rule 13a-15. With the participation of our CEO and CFO, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of November 30, 2024 based on the criteria established in *Internal Control - Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of November 30, 2024, based on those criteria. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Ernst & Young LLP, the Company’s independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting. ### Changes in internal control over financial reporting. There have been no changes in our internal controls over financial reporting during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ### Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Bassett Furniture Industries, Incorporated and Subsidiaries ### Opinion on Internal Control over Financial Reporting We have audited Bassett Furniture Industries, Incorporated and subsidiaries’ internal control over financial reporting as of November 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Bassett Furniture Industries, Incorporated and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of November 30, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of November 30, 2024 and November 25, 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended November 30, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 10, 2025 expressed an unqualified opinion thereon. ### Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. ### Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Richmond, Virginia February 10, 2025 Filed Feb 10, 2025. Source: SEC EDGAR, the filing index for accession 0001437749-25-003216. Last ingested by Listed: Nov 2, 2026, 12:16 ET. No prices; not investment advice.