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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Equity Bottom-Up

Bassett Furniture Inds / Equity Bottom-Up

<ul><li style="list-style-type: square;">We met with CFO Mike Daniel at the recent High Point Market.</li><li style="list-style-type: square;">There was a shock to the consumer in the April/May/June timeframe following the “Liberation Day” tariff announcements after a fairly good start to the year.</li><li style="list-style-type: square;">Management’s current tone is one of cautious optimism like others we spoke with at the market.</li></ul>

We met with CFO Mike Daniel at the recent High Point Market.There was a shock to the consumer in the April/May/June timeframe following the “Liberation Day” tariff announcements after a fairly good start to the year.Management’s current tone is one of cautious optimism like others we spoke with at the market.

BSET: Management Cautiously Optimistic at High Point; New Furniture Collections Showcased

<ul><li>BSET reported 3QFY25 EPS of $0.09 versus ($0.52), below our $0.12 estimate but in line with FactSet consensus.</li><li>Net sales in the quarter increased 5.9% to $80.1MM, slightly below our forecast for 6.3% growth to $80.4MM, but slightly above consensus of $79.9MM.</li><li>Excluding the closure of Noa Home in late 2024, sales increased 7.3%. </li></ul>

BSET reported 3QFY25 EPS of $0.09 versus ($0.52), below our $0.12 estimate but in line with FactSet consensus.Net sales in the quarter increased 5.9% to $80.1MM, slightly below our forecast for 6.3% growth to $80.4MM, but slightly above consensus of $79.9MM.Excluding the closure of Noa Home in late 2024, sales increased 7.3%. 

Bassett Furniture Industries, Inc: Sales Growth Accelerating...

Thematic (Sector/Industry)

<ul><li>Last week, the administration announced that it was delaying the planned January 6, 2026, tariff increases on upholstered furniture, cabinets, and vanities, while keeping the current 25% duties in place.</li><li>Tariff “relief,” not tariff “removal”. The administration’s decision to postpone the scheduled January 2026 increase in furniture-related tariffs by one year (to January 2027) avoids a near-term step-up in duties but leaves the current 25% tariff regime fully intact.</li><li>For the furniture industry, this is a timing benefit rather than a structural change in cost pressure.</li></ul>

Last week, the administration announced that it was delaying the planned January 6, 2026, tariff increases on upholstered furniture, cabinets, and vanities, while keeping the current 25% duties in place.Tariff “relief,” not tariff “removal”. The administration’s decision to postpone the scheduled January 2026 increase in furniture-related tariffs by one year (to January 2027) avoids a near-term step-up in duties but leaves the current 25% tariff regime fully intact.For the furniture industry, this is a timing benefit rather than a structural change in cost pressure.

Consumer Hardlines : Tariff Delays a Modest Positive; No Changes to Estimates

<div><ul><li>We spoke with CEO Iv Culp from Culp, Inc. (CULP) and Tiffany Hinkle, AVP IR with Haverty Furniture (HVT), two companies with excellent insight into the US home furnishings market.</li><li>The home furnishings sector is exhibiting cautious optimism after three to four years of defensive positioning.</li><li>Following pandemic-driven demand spikes and subsequent pull-forward effects, companies experienced an unusually severe downcycle requiring extensive cost restructuring.</li></ul></div>

We spoke with CEO Iv Culp from Culp, Inc. (CULP) and Tiffany Hinkle, AVP IR with Haverty Furniture (HVT), two companies with excellent insight into the US home furnishings market.The home furnishings sector is exhibiting cautious optimism after three to four years of defensive positioning.Following pandemic-driven demand spikes and subsequent pull-forward effects, companies experienced an unusually severe downcycle requiring extensive cost restructuring.

Beyond Tariffs - How Leading Furniture Companies Are Positioning for the Next Upcycle

<ul><li>Progress on at least some trade deals (Vietnam) was seen as a positive in a holiday-shortened week of trading.</li><li>The WTR Commercial/Contract Furniture Index gained 6.1%, the Residential Manufacturers &amp; Suppliers Index was up 2.1%, and the Home Goods Retailers Index gained 7.0% as the broader market indices were up 1.7% and the R2K was up 3.6%.</li><li>New home construction, on a per capita basis, in the US (and other anglophone countries) has effectively flatlined since the 1990s, leaving us with just as many dwelling units on a per capita basis as we had in the early 1990s, despite the fact that the total US population has increased by roughly 80 million (1).</li></ul>

Progress on at least some trade deals (Vietnam) was seen as a positive in a holiday-shortened week of trading.The WTR Commercial/Contract Furniture Index gained 6.1%, the Residential Manufacturers &amp; Suppliers Index was up 2.1%, and the Home Goods Retailers Index gained 7.0% as the broader market indices were up 1.7% and the R2K was up 3.6%.New home construction, on a per capita basis, in the US (and other anglophone countries) has effectively flatlined since the 1990s, leaving us with just as many dwelling units on a per capita basis as we had in the early 1990s, despite the fact that the total US population has increased by roughly 80 million (1).

Furniture/Furnishings Weekly - July 7, 2025

United States

Bassett Furniture Industries, Incorporated manufactures and sells a full line of furniture for the home.  The Company offers bedroom and dining suites, occasional tables and entertainment units, upholstered sofas and love seats, recliners, and mattresses, among other products.  Bassett's products are sold through retailers, including Bassett Furniture Direct.

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Bassett Furniture Inds (BSET US)

BSET: Management Cautiously Optimistic at High Point; New Furniture Collections Showcased

There was a shock to the consumer in the April/May/June timeframe following the “Liberation Day” tariff announcements after a fairly good start to...

Water Tower Research

Bassett Furniture Industries, Inc: Sales Growth Accelerating...

Net sales in the quarter increased 5.9% to $80.1MM, slightly below our forecast for 6.3% growth to $80.4MM, but slightly above consensus of $79.9MM.

Water Tower Research

Consumer Hardlines : Tariff Delays a Modest Positive; No Changes to Estimates

Last week, the administration announced that it was delaying the planned January 6, 2026, tariff increases on upholstered furniture, cabinets, and...

Water Tower Research

Beyond Tariffs - How Leading Furniture Companies Are Positioning for the Next Upcycle

We spoke with CEO Iv Culp from Culp, Inc. (CULP) and Tiffany Hinkle, AVP IR with Haverty Furniture (HVT), two companies with excellent insight into...

Water Tower Research

Furniture/Furnishings Weekly - July 7, 2025

The WTR Commercial/Contract Furniture Index gained 6.1%, the Residential Manufacturers & Suppliers Index was up 2.1%, and the Home Goods Retailers...

Water Tower Research

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