Costa Brava Believes That Bassett's Plan Will Decrease Shareholder Value

Market Wire, April, 2008

Today, Costa Brava Partnership III L.P. released the following letter to the shareholders of Bassett Furniture Industries, Inc. (NASDAQ: BSET):

April 1, 2008

Dear Fellow Shareholder:

Costa Brava Partnership III L.P. is one of the largest holders of the outstanding common stock of Bassett Furniture Industries, Inc. (the "Company" or "Bassett"). We have reviewed the business plan the Company filed with the U.S. Securities and Exchange Commission on March 19, 2008, and we discussed the plan with Company officers Robert Spilman, Jason Camp and Barry Safrit. We believe the Company's plan will put valuable corporate assets at risk and decrease shareholder value.

THE COMPANY'S PLAN IS NOT IN THE BEST INTEREST OF SHAREHOLDERS

Management wants to wager your money on its singular focus of repositioning the Company as a specialty furniture retailer in the distressed home furnishing industry. Their plan will deplete too much of your stable and secure assets to fund a speculative turn-around effort in an industry that in recent months has seen several bankruptcy filings. It's a high stakes plan. And the risk is yours.

Do you want management to bet your money on the execution of yet another plan to revitalize Bassett's shrinking furniture business? Management's past practices tell us the answer should be a resounding "NO." Since 2001, the Company has spent over $40 million in capital expenditures. This spending, however, could not stop the Company's retail business from losing almost $45 million over the same period. And now management wants to double-down.

While its furniture business has been failing, Bassett has maintained a stable cash flow from its 46.9% real estate interest in the International Home Furnishings Center in High Point, North Carolina and from its substantial hedge fund and securities portfolio. Management's plan calls for spending $10 to $12 million per year of your money on their gamble to reposition and expand a troubled retail program.

Why is management willing to gamble so much money on a high risk strategy when there are other viable options? Perhaps because it's not their money. It's yours.

Problems with the Company's plan:

--  Uncertainty.  Bassett touts the results of its new retail store
    prototype, but the results are based on a limited sample size and a very
    short observation period.

--  High Price.  The plan requires substantial capital needs over the next
    few years.

--  Increased Liabilities.  The Company has, and will continue to incur,
    large off balance-sheet liabilities in the leases and guarantees that
    support the underperforming retail locations.

--  Insufficient Scale.  Bassett has neither the brand recognition nor
    scale necessary to execute its rollout and repositioning plan.

--  High Risk.  If the plan doesn't work, the Company will have depleted
    its stable capital and assumed more contingent liabilities.
    

We implore the Company to pursue a more rational plan -- one based on a broad view of today's difficult economy and the troubling prospects for the furniture industry, and not on a myopic view of the Company's stable assets simply as a source of funding the ailing furniture business. It is time for ALL shareholders to realize at least some of their value in the Company, rather than allowing the Company to put so much of that value at risk.

THERE IS A BETTER PLAN THAT PAYS DIVIDENDS TO ALL SHAREHOLDERS

We believe a responsible plan would:

--  Reduce Execution Risk.  Minimize the risk of depleting shareholder
    value while pursuing management's retail strategy.  Now is not the time to
    bet all of the Company's stable assets to prop up the furniture business.

--  Return Value to Shareholders.  Immediately return the value of the
    marketable securities to shareholders in the form of a special dividend of
    $2.50 per share.  Then, as the hedge fund investments are redeemed by year-
    end, the Company should pay another special dividend of $2.50 per share.

--  Provide Some Return on Investment.  A substantial dividend is a
    responsible use of the Company's stable assets.

--  Responsibly Finance Execution of Furniture Plan if Warranted.  If the
    industry picks up and the Company's strategy is clearly successful, the
    Company should meet the furniture business' capital requirements by drawing
    from sources that won't deteriorate shareholder value.  These financing
    sources include dividends from the IHFC (either current dividends or a
    dividend from a refinancing), participation in the sale of Bassett's real
    estate investment in the IHFC, tapping the Company's existing credit line,
    or -- hopefully but unlikely -- generating cash from the Company's retail
    furniture initiatives.

--  Consider Strategic Alternatives.  While executing the modified retail
    plan, explore strategic alternatives, such as a merger or consolidation
    with another company in the retail furniture business.
    

Our plan is a responsible plan. It gives management an opportunity to execute a retail furniture strategy while reducing risk and maximizing shareholder value.