Note 5 - Inventories

9 Months Ended

Aug. 31, 2024

Notes to Financial Statements

Inventory Disclosure [Text Block]

5. Inventories

Domestic furniture inventories are valued at the lower of cost, which is determined using the last-in, first-out (LIFO) method, or market. Imported inventories and those applicable to our Lane Venture and Bassett Outdoor lines are valued at the lower of cost, which is determined using the first-in, first-out (FIFO) method, or net realizable value.

Inventories were comprised of the following:

	August 31, 2024			November 25, 2023
Wholesale finished goods	$	24,188		$	27,521
Work in process		453			637
Raw materials and supplies		16,223			18,655
Retail merchandise		33,285			33,090
Total inventories on first-in, first-out method		74,149			79,903
LIFO adjustment		(11,942	)		(11,738	)
Reserve for excess and obsolete inventory		(6,069	)		(5,183	)
	$	56,138		$	62,982

We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO. The need for these reserves is primarily driven by the normal product life cycle. As products mature and sales volumes decline, we rationalize our product offerings to respond to consumer tastes and keep our product lines fresh. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. In determining reserves, we calculate separate reserves on our wholesale and retail inventories. Our wholesale inventories tend to carry the majority of the reserves for excess quantities and obsolete inventory due to the nature of our distribution model. These wholesale reserves primarily represent design and/or style obsolescence. Typically, product is not shipped to our retail warehouses until a consumer has ordered and paid a deposit for the product. We do not typically hold retail inventory for stock purposes. Consequently, floor sample inventory and inventory for delivery to customers account for the majority of our inventory at retail. Retail reserves are based on accessory and clearance floor sample inventory in our stores and any inventory that is not associated with a specific customer order in our retail warehouses.

Activity in the reserves for excess quantities and obsolete inventory by segment are as follows:

	Wholesale Segment			Retail Segment			Corporate & Other (1)		Total
Balance at November 25, 2023	$	4,145		$	1,038		$	-	$	5,183
Additions charged to expense		3,930			524			500		4,954
Write-offs		(3,700	)		(368	)		-		(4,068	)
Balance at August 31, 2024	$	4,375		$	1,194		$	500	$	6,069

(1) Consists of a $500 reserve established against the retail inventory held by Noa Home due to our decision to cease operations by selling the remaining inventory in an orderly fashion over the next several months.

Our estimates and assumptions have been reasonably accurate in the past. We have not made any significant changes to our methodology for determining inventory reserves in 2024 and do not anticipate that our methodology is likely to change in the future.