Bassett Furniture Industries Inc (NASDAQ:BSET) stock fell 1.59% (As on April 2, 11:32:43 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the first quarter of FY 26. Operating income was $1.2 million or 1.4% of sales as compared to operating income of $2.5 million or 3.0% of sales for the prior year quarter. Gross margin of 56.2% represented an 80-basis point decrease from the prior year due to lower margins in both the wholesale and retail business. The company used $5.5 million of cash in operating activities as the first quarter is typically the slowest quarter for cash generation due to the historically slow rate of business during the Christmas season, coupled with negative working capital changes which were expected.

Moreover, Wholesale margins were down slightly, primarily due to volume declines in our domestic upholstery operations. Bassett Casegoods, on the other hand, posted a 12.1% sales gain and improved margins. Retail margins were significantly affected by our decision to absorb tariffs in retail pricing during the fourth quarter of 2025, which are delivered in Q1. Pricing for the second quarter forward now includes the tariffs at retail and wholesale.

Meanwhile, on the macro front, demand continues to suffer from the stubbornly weak residential housing market. Amidst that backdrop, severe weather occurring over the last two weekends of January essentially shut down normal operations at many of the retail stores and warehouses. The timing of the bad weather was especially unfortunate as the back half of January is usually a strong sales period. On the positive side, retail written sales for our President’s Day event rebounded nicely, producing a double-digit sales increase for the promotion. Ultimately, retail written sales were flat for the quarter. In addition, the omni-channel model as e-commerce sales increased by 28% in the quarter. The new Cincinnati store is under construction and the company will begin work on the new Orlando location in early April. Several initiatives are underway that are expected to save an additional $1.5 to $2.0 million annually beginning late in the second quarter.

BSET in the first quarter of FY 26 has reported the adjusted earnings per share of $0.13, missing the analysts’ estimates for the adjusted earnings per share of $0.17, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue decline of 2.2 percent to $80.34 million in the first quarter of FY 26, missing the analysts’ estimates for revenue by 4.29%.