Bassett Third Quarter to Reflect Continued Transition and Soft Economy.

Business Editors

BASSETT, Va.--(BUSINESS WIRE)--Sept. 5, 2001

Bassett Furniture Industries Inc. (NASDAQ: BSET) announced today that it expects earnings for the fiscal third quarter of 2001, being significantly impacted by lower sales and production levels and transition costs related to shifting domestic wood production between facilities, to be at an approximate breakeven level (before restructuring charges).

As previously announced, the third quarter restructuring charges are expected to be in the range of $.24 to $.30 per share after tax, the majority of which will be noncash. Sales levels declined by approximately 20% from the third quarter of 2000, due largely to a soft furniture retail environment and the loss of two major customers to bankruptcy in late 2000. Average weekly sales for the third quarter leveled out and were about even with the second quarter.

"We continue to feel the effects of a soft economy and are responding by focusing on new product introductions, improving service levels, bringing inventories in balance with demand and reducing our manufacturing cost structure," said Robert H. Spilman Jr., president and chief executive officer.

The Bassett Furniture Direct (BFD) store program experienced good retail sales in August and over the Labor Day weekend. The Company expects licensees to open six to 10 new stores during the rest of 2001, ending the year with approximately 70 BFD stores. The addition of these new stores should result in increased sales for the fourth quarter.

"Our long-term prognosis for the Company and the industry remains positive. Our strong balance sheet and high brand name recognition will continue to provide the foundation for the Company as we transition from a furniture manufacturer to a combined manufacturer, importer, and retailer of home furnishings," added Mr. Spilman.

Bassett Furniture Industries Inc., based in Bassett, Va., is one of the world's leading manufacturers and marketers of branded home furnishings. Bassett's products, designed to provide quality, style and value, are sold through Bassett Furniture Direct(TM) stores, At Home with Bassett(R), and other furniture and department stores. The Company's common stock is traded on the NASDAQ market under the symbol BSET. More information about Bassett is available on the company's Internet site at www.bassettfurniture.com.

Certain of the statements in the immediately preceding paragraphs, particularly those preceded by, followed by or including the words "believes," "expects," "anticipates," "intends," "estimates," or similar expressions, or those relating to sales declines, net earnings, production levels, cost reductions, inventory reduction, anticipating future improvement or financial results for periods beyond the second quarter of fiscal year 2001, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward-looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause those results to differ materially from those expressed in the forward-looking statements: Economic, competitive, governmental, technological, raw material issues and other factors identified in Bassett's filings with the Securities and Exchange Commission.