----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C.  20549**

**Form      10-Q**

| **[X]** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---------|------------------------------------------------------------------------------------------------------------------------------------------|

*For      the      quarterly period ended **June 30, 2007***

*or*

| **[   ]** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

*for      the      transition period from        to   .*

**STANLEY      FURNITURE COMPANY, INC.**

|                                                                                         | **Delaware**                                        |   | **54-1272589** |   |
|----------------------------------------------------------------------------------------------|-----------------------------------------------------|--------|----------------|--------|
| (State                or                other jurisdiction of incorporation or organization) | (I.R.S.                Employer Identification No.) |

**1641      Fairystone Park Highway, Stanleytown,      Virginia  24168**

**(276)      627-      2000**

**July 12, 2007, 10,416,179**
** **

----

**ITEM      1.**
**CONSOLIDATED FINANCIAL      STATEMENTS**

**STANLEY      FURNITURE COMPANY, INC.**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | ** (unaudited)**       |        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **June                30,** |        |   | December                31, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **2007**                    |        |   | 2006 |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                        |        |   |   |   |
| Current                assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        |        |   |   |   |
| Cash                                                                                                                                                                              |   | **$**                       | **18,542**  |   |   | $ | 6,269 |   |
| Accounts                receivable, less allowances of                $1,893 and $1,554                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | ** **                  | **31,024**  |   |   |   | 32,260 |   |
| Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |        |   |   |   |   |   |
| Finished                goods                                                                                                                                                          |   | ** **                  | **47,994**  |   |   |   | 45,172 |   |
| Work-in-process                                                                                                                                                                        |   | ** **                  | **5,560**   |   |   |   | 5,183 |   |
| Raw                materials                                                                                                                                                           |   | ** **                  | **9,319**   |   |   |   | 9,009 |   |
| Total                inventories                                                                                                                                                            |   | ** **                  | **62,873**  |   |   |   | 59,364 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |        |   |   |   |   |   |
| Prepaid                expenses and other current                assets                                                                                            |   | ** **                  | **2,351**   |   |   |   | 2,085 |   |
| Deferred                income                taxes                                                                                                                |   | ** **                  | **3,506**   |   |   |   | 3,928 |   |
| Total                current                assets                                                                                                                           |   | ** **                  | **118,296** |   |   |   | 103,906 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |        |   |   |   |   |   |
| Property,                plant and equipment,                net                                                                                                   |   | ** **                  | **47,919**  |   |   |   | 49,159 |   |
| Goodwill                                                                                                                                                           |   | ** **                  | **9,072**   |   |   |   | 9,072 |   |
| Other                assets                                                                                                                                        |   | ** **                  | **4**       |   |   |   | 541 |   |
| Total                assets                                                                                                                                                  |   | **$**                       | **175,291** |   |   | $ | 162,678 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |        |   |   |   |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                        |        |   |   |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        |        |   |   |   |   |   |
| Current                maturities of long-term                debt                                                                                                                |   | **$**                       | **2,857**   |   |   | $ | 2,857 |   |
| Accounts                payable                                                                                                                                                   |   | ** **                  | **18,461**  |   |   |   | 17,789 |   |
| Accrued                salaries, wages and                benefits                                                                                                                |   | ** **                  | **7,903**   |   |   |   | 9,868 |   |
| Other                accrued                expenses                                                                                                                              |   | ** **                  | **1,808**   |   |   |   | 1,356 |   |
| Total                current                liabilities                                                                                                                                |   | ** **                  | **31,029**  |   |   |   | 31,870 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |        |   |   |   |   |   |
| Long-term                debt, exclusive of current                maturities                                                                                      |   | ** **                  | **29,286**  |   |   |   | 5,714 |   |
| Deferred                income                taxes                                                                                                                |   | ** **                  | **6,635**   |   |   |   | 7,422 |   |
| Other                long-term                liabilities                                                                                                          |   | ** **                  | **8,388**   |   |   |   | 8,025 |   |
| Total                liabilities                                                                                                                                                       |   | ** **                  | **75,338**  |   |   |   | 53,031 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |        |   |   |   |   |   |
| **STOCKHOLDERS’                EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |        |   |   |   |   |   |
| Common                stock,                $.02 par value, 25,000,000 shares authorized10,416,179                and 10,928,610 shares issued                and outstanding                                                                                                                                                                                                                                                                                                                                                                                                                               |   | ** **                  | **208**     |   |   |   | 219 |   |
| Capital                in                excess of par                value                                                                                        |   | ** **                  | **200**     |   |   |   | 59 |   |
| Retained                earnings                                                                                                                                   |   | ** **                  | **100,467** |   |   |   | 114,189 |   |
| Accumulated                other comprehensive                loss                                                                                                 |   | ** **                  | **(922**    | **)** |   |   | (4,820 | ) |
| Total                stockholders’                equity                                                                                                                    |   | ** **                  | **99,953**  |   |   |   | 109,647 |   |
| Total                liabilities and stockholders’                equity                                                                                                         |   | **$**                       | **175,291** |   |   | $ | 162,678 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        |        |   |   |   |   |   |

----

**STANLEY      FURNITURE COMPANY, INC.**

|                                                                           |   | Three                Months |       |   | Six                Months |   |
|--------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                                                                           |   | Ended                       |       |   | Ended                     |   |
|                                                                           |   | **June                30,** |       |   | July                1,    |   |   | **June                30,** |   |   | July                1, |   |
|                                                                           |   | **2007**                    |       |   | 2006                      |   |   | **2007** |   |   | 2006 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |
| Net                sales                                                       |   | **$**                       | **67,722** |   |                      | $      | 77,476 |   |   | **$** | **142,830** |   |   | $ | 161,000 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Cost                of                sales                                    |   | ** **                  | **54,082** |   |                      |   | 59,858 |   |   | ** ** | **115,696** |   |   |   | 123,624 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Gross                profit                                                    |   | ** **                  | **13,640** |   |                      |   | 17,618 |   |   | ** ** | **27,134** |   |   |   | 37,376 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and administrative expenses                    |   | ** **                  | **10,093** |   |                      |   | 11,323 |   |   | ** ** | **20,508** |   |   |   | 22,451 |   |
| Pension                plan                termination charge (see note 4)     |   | ** **                  | **6,605**  |   |                      |   |   |   |   | ** ** | **6,605** |   |   |   |   |   |
| Operating                income (loss)                                         |   | ** **                  | **(3,058** | **)**  |                      |   | 6,295 |   |   | ** ** | **21** |   |   |   | 14,925 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Other                income,                net                                |   | ** **                  | **176**    |   |                      |   | 68 |   |   | ** ** | **108** |   |   |   | 161 |   |
| Interest                income                                                 |   | ** **                  | **159**    |   |                      |   | 146 |   |   | ** ** | **186** |   |   |   | 256 |   |
| Interest                expense                                                |   | ** **                  | **827**    |   |                      |   | 509 |   |   | ** ** | **1,344** |   |   |   | 1,033 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) before income                taxes                |   | ** **                  | **(3,550** | **)**  |                      |   | 6,000 |   |   | ** ** | **(1,029** | **)** |   |   | 14,309 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income                taxes                                                    |   | ** **                  | **(1,174** | **)**  |                      |   | 2,063 |   |   | ** ** | **(329** | **)** |   |   | 4,980 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                                               |   | **$**                       | **(2,376** | **)**  |                      | $      | 3,937 |   |   | **$** | **(700** | **)** |   | $ | 9,329 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                per                share:                              |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                          |   | **$**                       | **(.23**   | **)**  |                      | $      | .33 |   |   | **$** | **(.07** | **)** |   | $ | .77 |   |
| Diluted                                                                        |   | **$**                       | **(.23**   | **)**  |                      | $      | .32 |   |   | **$** | **(.07** | **)** |   | $ | .75 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average shares outstanding:                            |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                          |   | ** **                  | **10,483** |   |                      |   | 11,973 |   |   | ** ** | **10,626** |   |   |   | 12,101 |   |
| Diluted                                                                        |   | ** **                  | **10,483** |   |                      |   | 12,264 |   |   | ** ** | **10,626** |   |   |   | 12,397 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividend                declared and paid per common share |   | **$**                       | **.10**    |   |                      | $      | .08 |   |   | **$** | **.20** |   |   | $ | .16 |   |
|                                                                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |

----

**STANLEY      FURNITURE COMPANY, INC.**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Six                Months Ended |         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **June                30,**     |         |   | July                1, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **2007**                        |         |   | 2006 |   |
| **Cash                flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                            |         |   |   |   |
| Cash                received                from                customers                                                                                                       |   | **$**                           | **143,963**  |   |   | $ | 159,732 |   |
| Cash                paid to                suppliers and                employees                                                                                               |   | ** **                      | **(136,616** | **)** |   |   | (135,731 | ) |
| Interest                paid,                net                                                                                                                                |   | ** **                      | **(1,618**   | **)** |   |   | (1,393 | ) |
| Income                taxes                paid,                net                                                                                                             |   | ** **                      | **(3,162**   | **)** |   |   | (6,433 | ) |
| Net                cash provided by operating                activities                                                                                                                             |   | ** **                      | **2,567**    |   |   |   | 16,175 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            |         |   |   |   |   |   |
| **Cash                flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                            |         |   |   |   |   |   |
| Capital                expenditures                                                                                                                                             |   | ** **                      | **(1,947**   | **)** |   |   | (749 | ) |
| Purchase                of                other                assets                                                                                                           |   | ** **                      | **(8**       | **)** |   |   | (17 | ) |
| Net                cash (used) by investing                activities                                                                                                                               |   | ** **                      | **(1,955**   | **)** |   |   | (766 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            |         |   |   |   |   |   |
| **Cash                flows from financing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                            |         |   |   |   |   |   |
| Issuance                of                senior                notes                                                                                                           |   | ** **                      | **25,000**   |   |   |   |   |   |
| Repayment                of                senior                notes                                                                                                          |   | ** **                      | **(1,428**   | **)** |   |   | (1,428 | ) |
| Purchase                and                retirement of common                stock                                                                                            |   | ** **                      | **(11,308**  | **)** |   |   | (16,175 | ) |
| Proceeds                from                insurance policy                loans                                                                                               |   | ** **                      | **1,386**    |   |   |   | 1,241 |   |
| Dividends                paid                                                                                                                                                   |   | ** **                      | **(2,131**   | **)** |   |   | (1,944 | ) |
| Proceeds                from                exercised stock                options                                                                                              |   | ** **                      | **112**      |   |   |   | 713 |   |
| Tax                benefit                from exercise of stock                options                                                                                         |   | ** **                      | **30**       |   |   |   | 255 |   |
| Net                cash provided (used) by financing                activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | ** **                      | **11,661**   |   |   |   | (17,338 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            |         |   |   |   |   |   |
| Net                increase                (decrease) in                cash                                                                                                    |   | ** **                      | **12,273**   |   |   |   | (1,929 | ) |
| Cash                at                beginning of                period                                                                                                        |   | ** **                      | **6,269**    |   |   |   | 12,556 |   |
| **Cash                at end of                period                                                                                    **                                                         |   | **$**                           | **18,542**   |   |   | $ | 10,627 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            |         |   |   |   |   |   |

**Reconciliation      of net income to net cash provided by operating      activities:**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |       |       |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Net                income                (loss)                                                                                          |   | **$**      | **(700**   | **)**  |   | $      | 9,329 |   |
| Depreciation                and                amortization                                                                                                  |   | ** ** | **3,025**  |   |   |   | 2,912 |   |
| Pension                termination                                                                                                                           |   | ** ** | **5,002**  |   |   |   |   |   |
| Deferred                income                taxes                                                                                                          |   | ** ** | **(2,303** | **)**  |   |   | (468 | ) |
| Tax                benefit from exercise of stock                options                                                                                     |   | ** ** | **(30**    | **)**  |   |   | (255 | ) |
| Stock-based                compensation                                                                                                                      |   | ** ** | **378**    |   |   |   | 297 |   |
| Other,                net                                                                                                                                    |   | ** ** | **194**    |   |   |   | 6 |   |
| Changes                in assets and                liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |       |   |   |   |   |   |
| Accounts                receivable                                                                                                                                          |   | ** ** | **1,236**  |   |   |   | (1,001 | ) |
| Inventories                                                                                                                                                                 |   | ** ** | **(3,509** | **)**  |   |   | 8,505 |   |
| Prepaid                expenses and other current                assets                                                                                                     |   | ** ** | **(429**   | **)**  |   |   | (298 | ) |
| Accounts                payable                                                                                                                                             |   | ** ** | **572**    |   |   |   | 446 |   |
| Accrued                salaries, wages and                benefits                                                                                                          |   | ** ** | **(1,033** | **)**  |   |   | (2,948 | ) |
| Other                accrued                expenses                                                                                                                        |   | ** ** | **508**    |   |   |   | 356 |   |
| Other                assets                                                                                                                                                 |   | ** ** | **(707**   | **)**  |   |   | (616 | ) |
| Other                long-term                liabilities                                                                                                                   |   | ** ** | **363**    |   |   |   | (90 | ) |
| Net                cash provided by operating                activities                                                                                                                              |   | **$**      | **2,567**  |   |   | $      | 16,175 |   |

----

**STANLEY      FURNITURE COMPANY, INC.**

| 1. | **Preparation                of Interim Unaudited Consolidated Financial                Statements** |
|----|------------------------------------------------------------------------------------------------------|

**Property,      Plant and Equipment**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **June                30,** |        |   | December                31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **2007**                    |        |   | 2006                        |   |
| Land                and                buildings                                                                                                  |   | **$**                       | **41,271**  |   |                        | $      | 40,887 |   |
| Machinery                and                equipment                                                                                             |   | ** **                  | **80,271**  |   |                        |   | 79,051 |   |
| Office                furniture and                equipment                                                                                      |   | ** **                  | **1,452**   |   |                        |   | 1,452 |   |
| Construction                in                process                                                                                             |   | ** **                  | **2,119**   |   |                        |   | 2,071 |   |
| Property,                plant and equipment, at                cost                                                                                             |   | ** **                  | **125,113** |   |                        |   | 123,461 |   |
| Less                accumulated                depreciation                                                                                       |   | ** **                  | **77,194**  |   |                        |   | 74,302 |   |
| Property,                plant and equipment,                net                                                                                                 |   | **$**                       | **47,919**  |   |                        | $      | 49,159 |   |

| 3. | **Debt** |
|----|----------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **June                30,** |       |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **2007**                    |       |   | 2006              |   |
| 7.43%                senior                notes due through November 18, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **$**                       | **1,428**  |   |              | $      | 1,428 |   |
| 6.94%                senior                notes due through May 3,                2011                                                                                      |   | ** **                  | **5,715**  |   |              |   | 7,143 |   |
| 6.73%                senior                notes due through May 3,                2017                                                                                      |   | ** **                  | **25,000** |   |              |   |   |   |
| Total                                                                                                                                                                                       |   | ** **                  | **32,143** |   |              |   | 8,571 |   |
| Less                current                maturities                                                                                                                        |   | ** **                  | **2,857**  |   |              |   | 2,857 |   |
| Long-term                debt, exclusive of current                maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **$**                       | **29,286** |   |              | $      | 5,714 |   |

----

**Employee      Benefit Plans**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Three                Months |      |   | Six                Months |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|---------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Ended                       |      |   | Ended                     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **June                30,** |      |   | July                1,    |   |   | **June                30,** |   |   | July                1, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **2007**                    |      |   | 2006                      |   |   | **2007** |   |   | 2006 |   |
| Interest                cost                                                                                                                      |   | **$**                       | **92**    |   |                      | $      | 227 |   |   | **$** | **215** |   |   | $ | 464 |   |
| Expected                return on plan                assets                                                                                      |   | ** **                  | **(75**   | **)**  |                      |   | (247 | ) |   | ** ** | **(188** | **)** |   |   | (491 | ) |
| Amortization                of accumulated                loss                                                                                                                  |   | ** **                  | **87**    |   |                      |   | 120 |   |   | ** ** | **217** |   |   |   | 250 |   |
| Net                cost                                                                                                                                          |   | ** **                  | **104**   |   |                      |   | 100 |   |   | ** ** | **244** |   |   |   | 223 |   |
| Settlement                expense                                                                                                                 |   | ** **                  | **6,606** |   |                      |   | 95 |   |   | ** ** | **6,606** |   |   |   | 311 |   |
| Total                expense                                                                                                                                     |   | **$**                       | **6,710** |   |                      | $      | 195 |   |   | **$** | **6,850** |   |   | $ | 534 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Three                Months |   |   | Six                Months |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Ended                       |   |   | Ended                     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **June                30,** |   |   | July                1,    |   |   | **June                30,** |   |   | July                1, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **2007**                    |   |   | 2006                      |   |   | **2007** |   |   | 2006 |   |
| Service                cost                                                                                                                    |   | **$**                       | **21** |   |                      | $      | 24 |   |   | **$** | **42** |   |   | $ | 48 |   |
| Interest                cost                                                                                                                   |   | ** **                  | **39** |   |                      |   | 43 |   |   | ** ** | **79** |   |   |   | 87 |   |
| Amortization                of transition                obligation                                                                            |   | ** **                  | **33** |   |                      |   | 32 |   |   | ** ** | **65** |   |   |   | 65 |   |
| Amortization                of prior service                cost                                                                               |   | ** **                  | **(2** | **)**  |                      |   |   |   |   | ** ** | **(4** | **)** |   |   |   |   |
| Amortization                of accumulated                loss                                                                                 |   | ** **                  | **5**  |   |                      |   | 10 |   |   | ** ** | **11** |   |   |   | 21 |   |
| Net                periodic postretirement benefit                cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **$**                       | **96** |   |                      | $      | 109 |   |   | **$** | **193** |   |   | $ | 221 |   |

| 5. | **Stockholders’                Equity** |
|----|-----------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Three                Months |       |   | Six                Months |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Ended                       |       |   | Ended                     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **June                30,** |       |   | July                1,    |   |   | **June                30,** |   |   | July                1, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **2007**                    |       |   | 2006                      |   |   | **2007** |   |   | 2006 |   |
| Weighted                average shares outstanding for basic                calculation                                                                                                                 |   | ** **                  | **10,483** |   |                      |   | 11,973 |   |   |   | **10,626** |   |   |   | 12,101 |   |
| Add:                Effect                of dilutive stock                options(1)                                                                                                              |   | ** **                  |       |   |                      |   | 291 |   |   | ** ** |   |   |   |   | 296 |   |
| Weighted                average shares outstandingadjusted                for                diluted                calculation                                                                         |   |                        | **10,483** |   |                      |   | 12,264 |   |   |   | **10,626** |   |   |   | 12,397 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |    |   |                      |       |     |     |   |       | Accumulated   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|---------|--------|---------------------------|------------|----------|----------|--------|------------|---------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |    |   | Capital                in |       |     |     |   |       | Other         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Common     |    |   | Excess                of  |       |     | Retained |   |       | Comprehensive |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Stock      |    |   | Par                Value  |       |     | Earnings |   |       | Loss          |   |
| Balance,                December 31,                2006                                                           |   | $          | 219     |   |                      | $          | 59       |     |   | $          | 114,189       |   |   | $ | (4,820 | ) |
| Cumulative                effect of adoption of FIN 48                                                                                                                                                                                                                                                                                                                                                               |   |       |    |   |                      |       |     |     |   |       | 22            |   |   |   |   |   |
| **Adjusted                balance, December 31, 2006**                                                                                                                                                                                                                                                                                                                                                               |   | ** ** | **219** |   |                      | ** ** | **59**   |     |   | ** ** | **114,211**   |   |   | ** ** | **(4,820** | **)** |
| **Net                loss                                                       **                                                |   |       |    |   |                      |       |     |     |   | ** ** | **(700**      | **)**  |   |   |   |   |
| **Exercise                of stock                options                                                       **                |   |       |    |   |                      | ** ** | **112**  |     |   |       |          |   |   |   |   |   |
| **Tax                benefit on exercise of stock                options**                                                                                                                                                                                                                                                                                                                                           |   |       |    |   |                      | ** ** | **36**   |     |   |       |          |   |   |   |   |   |
| **Stock                repurchases                                                       **                                       |   | ** ** | **(11** | **)**  |                      | ** ** | **(385** | **)**    |   | ** ** | **(10,913**   | **)**  |   |   |   |   |
| **Stock-based                compensation                                                       **                                |   |       |    |   |                      | ** ** | **378**  |     |   |       |          |   |   |   |   |   |
| **Cash                dividends paid, $.20 per                share**                                                                                                                                                                                                                                                                                                                                                |   |       |    |   |                      |       |     |     |   | ** ** | **(2,131**    | **)**  |   |   |   |   |
| **Pension                termination                                                       **                                     |   |       |    |   |                      |       |     |     |   |       |          |   |   | ** ** | **3,739** |   |
| **Adjustment                to net periodic benefit                cost**                                                                                                                                                                                                                                                                                                                                            |   | ** ** |    |   |                      |       |     |     |   | ** ** |          |   |   | ** ** | **159** |   |
| **Balance,                June 30,                2007                                                          ** |   | **$**      | **208** |   |                      | **$**      | **200**  |     |   | **$**      | **100,467**   |   |   | **$** | **(922** | **)** |

**Income      Taxes**

**Management’s Discussion and Analysis of Financial Condition and      Results of Operations**

**Results      of      Operations**

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Three                Months |      |   | Six                Months |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|---------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Ended                       |      |   | Ended                     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **June                30,** |      |   | July                1,    |   |   | **June                30,** |   |   | July                1, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **2007**                    |      |   | 2006                      |   |   | **2007** |   |   | 2006 |   |
| Net                sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | ** **                  | **100.0** | **%**  |                      |   | 100.0 | % |   | ** ** | **100.0** | **%** |   |   | 100.0 | % |
| Cost                of                sales                                                                                                                       |   | ** **                  | **79.9**  |   |                      |   | 77.3 |   |   | ** ** | **81.0** |   |   |   | 76.8 |   |
| Gross                profit                                                                                                                                                 |   | ** **                  | **20.1**  |   |                      |   | 22.7 |   |   | ** ** | **19.0** |   |   |   | 23.2 |   |
| Selling,                general and administrative                expenses                                                                                        |   | ** **                  | **14.9**  |   |                      |   | 14.6 |   |   | ** ** | **14.4** |   |   |   | 13.9 |   |
| Pension                plan                termination                charge                                                                                      |   | ** **                  | **9.7**   |   |                      |   |   |   |   | ** ** | **4.6** |   |   |   |   |   |
| Operating                income                (loss)                                                                                                                       |   | ** **                  | **(4.5**  | **)**  |                      |   | 8.1 |   |   |   |   |   |   |   | 9.3 |   |
| Other                income,                net                                                                                                                   |   | ** **                  | **.3**    |   |                      |   | .1 |   |   | ** ** | **.1** |   |   |   | .1 |   |
| Interest                income                                                                                                                                    |   | ** **                  | **.2**    |   |                      |   | .2 |   |   | ** ** | **.1** |   |   |   | .2 |   |
| Interest                expense                                                                                                                                   |   | ** **                  | **1.2**   |   |                      |   | .7 |   |   | ** ** | **.9** |   |   |   | .6 |   |
| Income                before income                taxes                                                                                                                    |   | ** **                  | **(5.2**  | **)**  |                      |   | 7.7 |   |   | ** ** | **(.7** | **)** |   |   | 8.9 |   |
| Income                taxes                                                                                                                                       |   | ** **                  | **(1.7**  | **)**  |                      |   | 2.6 |   |   | ** ** | **(.2** | **)** |   |   | 3.1 |   |
| Net                income                (loss)                                                                                                                             |   | ** **                  | **(3.5**  | **)**  |                      |   | 5.1 | % |   | ** ** | **(.5** | **)** |   |   | 5.8 | % |

----

**Financial      Condition, Liquidity and Capital Resources**

----

**Critical      Accounting Policies**

**Forward-Looking      Statements**

| **ITEM                3.** | **Quantitative                and Qualitative Disclosures about Market                Risk** |
|----------------------------|----------------------------------------------------------------------------------------------|

----

| **ITEM                4.** | **Controls and                Procedures** |
|----------------------------|--------------------------------------------|

| (a) | Evaluation                of                disclosure controls and procedures.  Under the supervision and                with the participation of our management, including our principal                executive officer and principal financial officer, we conducted an                evaluation of our disclosure controls and procedures, as such term                is                defined under Rule 13a-15(e) promulgated under the Securities Exchange                Act                of 1934, as amended (the Exchange Act).  Based on this                evaluation, our principal executive officer and our principal financial                officer concluded that our disclosure controls and procedures were                effective as of the end of the period covered by this quarterly                report. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Changes                in                internal controls over financial reporting.  There were no                changes in our internal control over financial reporting that occurred                during the second quarter that have materially affected, or are reasonably                likely to materially affect, our internal control over financial                reporting. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item                2. | Unregistered Sales of Equity Securities and                Use of                Proceeds |
|------------------------|-------------------------------------------------------------------------------------------|

|                                                              |                       |                        |                                                  | Maximum                  number (or                     |
|-------------------------------------------------------------------|----------------------------|-----------------------------|-------------------------------------------------------|---------------------------------------------------------|
|                                                              |                       |                        | Total                  number                  of     | approximate                  dollar                     |
|                                                              | Total                      |                        | Shares                  purchased                     | value)                  of                  shares that |
|                                                              | number                  of | Average                     | as                  part of                  publicly | may                  yet be                  purchased  |
|                                                              | Shares                     | price                  paid | announced                  plans                      | under                  the                  plans or    |
| Period                                                            | Purchased                  | per                  share  | or                  programs                          | programs                  (a)                           |
|                                                              |                       |                        |                                                  |                                                    |
| April 1                  to May 5, 2007                 | 89,400                     | $21.97                      | 89,400                                                | $23,383,954                                             |
| May 6                  to                  June 2, 2007 | 96,700                     | $21.64                      | 96,700                                                | $21,291,239                                             |
| June 3 to June                  30, 2007           |                       |                        |                                                  | $21,291,239                                             |
|                                                              |                       |                        |                                                  |                                                    |
| Total                                                             | 186,100                    |  $21.80                | 186,100                                               |

| (a) | On July 17, 2006, we announced that our Board of                Directors                increased our stock repurchase authorization to $50                million.  Consequently, we may purchase our common stock, from                time to time, either directly or through agents, in the open market,                through negotiated purchases or otherwise, at prices and on terms                satisfactory to us. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (b.) | The                stockholders of the Company elected two directors for a three-year                term                expiring at the annual meeting of stockholders to be held in                2010.  The election was approved by the following                vote: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                           |   |  For                 |   |                      Withheld |
|----------------------------------------------------------------|--------|------------------------------------------|--------|--------------------------------------------------------|
|                                                           |   |                                     |   |                                                   |
|  Thomas              L. Millner            |   |  9,918,465           |   |                  326,079                          |
|                                                           |   |                                     |   |                                                   |
|  Jeffrey              R. Scheffer     |   |  10,099,318     |   |                  145,226                          |

| Item                6. | Exhibits |
|------------------------|----------|

| 3.1    | Restated                Certificate of Incorporation of the Registrant as amended (incorporated                by                reference to Exhibit 3.1 to the Registrant’s Form 10-Q (Commission File                No. 0-14938) for the quarter ended July 2, 2005). |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                                                                            |   |
| 3.2    | By-laws                of                the Registrant as amended (incorporated by reference to Exhibit 3                to the                Registrant’s Form 10-Q (Commission File No. 0-14938) for the quarter ended                September 27, 2003).            |   |
|   |                                                                                                                                                                                                                                                                            |   |
| 10.1   | Fourth                Amendment, dated July 13, 2007, to the revolving credit facility                dated                August 29, 2003, between the Registrant and Wachovia Bank.                (1)                                                                        |   |
|   |                                                                                                                                                                                                                                                                            |   |
| 31.1   | Certification                by Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to                18 U.S.C.                Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley                Act                of 2002.(1)                      |   |
|   |                                                                                                                                                                                                                                                                            |   |
| 31.2   | Certification                by Douglas I. Payne, our Chief Financial Officer, pursuant to 18                U.S.C.                Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley                Act                of 2002. (1)                        |   |
|   |                                                                                                                                                                                                                                                                            |   |
| 32.1   | Certification                of Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to                18 U. S.                C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley                Act of 2002. (1)                                  |   |
|   |                                                                                                                                                                                                                                                                            |   |
| 32.2   | Certification                of Douglas I. Payne, our Chief Financial Officer, pursuant to 18                U. S. C.                Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley                Act                of 2002. (1)                      |   |

----

| Date:                July 17, 2007 |   | **STANLEY                FURNITURE COMPANY, INC.**                                             |
|------------------------------------|--------|------------------------------------------------------------------------------------------------|
|                               |   | By:                /s/ Douglas I. Payne                                                        |
|                               |   | Douglas                I. Payne                                                                |
|                               |   | Executive                V.P. – Finance & AdministrationAnd                Secretary |
|                               |   | (Principal                Financial and Accounting                Officer)                     |

----