It's tough to be a furniture maker these days, and Bassett Furniture's (NASDAQ:BSET) recent quarterly results represent the challenges facing the industry.

Fellow Fool Rich Duprey recently highlighted those challenges, which include a slowing housing market, the migration of manufacturing to less-costly China, and until recently, rapidly rising oil and commodity prices that slowed consumer spending and increased input costs for making furniture.

It's no surprise, then, that Bassett reported weaker third-quarter results. Sales fell 6.3% to $77.6 million while net income fell to $0.04 per share from $0.16 in the third quarter of last year. Last year's quarter included a $0.09 charge related to turning a number of stores owned by licensees into company-owned ones in an attempt to revive flagging retail trends. Wholesale revenue, or sales made to other furniture retailers, fell 8.3%, while namesake retail store sales were flat for the quarter, though up significantly year to date because of the licensee store acquisitions.

The company's latest 10-K filing speaks to the way foreign manufacturing is turning the industry upside down, as retailers have been able to directly source their own products, rather than relying on the Virginia and Carolina firms that have dominated furniture manufacturing for decades.

As a result, over the past five years, Bassett has cut its production facilities and employee headcount by more than 50%. In 2004, 23% of the company's wholesale sales stemmed from imported goods. That grew to 34% last year and is expected to reach 50% within the next couple of years.

For now, the company remains profitable from a net income perspective, but cash flow has been uneven as investments in affiliated companies have drained operating cash flow and other capital is used on capital spending and to repurchase outside retailers. The two bright spots are a dividend yield of 4.8% and low levels of debt, but with all of the uncertainty surrounding the company, it's hard to tell if top-line growth will return to drive growth in cash flow and secure the high dividend coupon.

Bassett's stock price has fluctuated over the past couple of years. Only Culp (NYSE:CFI), Furniture Brands (NYSE:FBN), and Ethan Allen (NYSE:ETH) have experienced positive stock returns over the past year, while Stanley Furniture (NASDAQ:STLY), Bassett, Natuzzi (NYSE:NTZ), and Hooker Furniture (NASDAQ:HOFT) have had negative returns. Stanley and Hooker do have the best five-year charts, but the outlook for most firms in the industry is not overly compelling these days. Let's see if restructuring moves kick-start growth for the domestic retailers and manufacturers and they can find ways to capitalize on the trend toward importing products from overseas.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned further.