----

**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 **September 29, 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**

**October 12, 2007, 10,332,179 **

----

----

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

**STANLEY        FURNITURE COMPANY, INC.**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **                    (unaudited)** |        |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **September                  29,**            |        |   | December                  31, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **2007**                                      |        |   | 2006 |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                          |        |   |   |   |
| Current                  assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                          |        |   |   |   |
| Cash                                                                                                                                                                                  |   | **$**                                         | **15,264**  |   |   | $ | 6,269 |   |
| Accounts                  receivable, less allowances of                  $2,132 and $1,554                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | ** **                                    | **35,270**  |   |   |   | 32,260 |   |
| Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                          |        |   |   |   |   |   |
| Finished                  goods                                                                                                                                                            |   | ** **                                    | **47,998**  |   |   |   | 45,172 |   |
| Work-in-process                                                                                                                                                                            |   | ** **                                    | **5,945**   |   |   |   | 5,183 |   |
| Raw                  materials                                                                                                                                                             |   | ** **                                    | **8,395**   |   |   |   | 9,009 |   |
| Total                  inventories                                                                                                                                                              |   | ** **                                    | **62,338**  |   |   |   | 59,364 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                          |        |   |   |   |   |   |
| Prepaid                  expenses and other current                  assets                                                                                            |   | ** **                                    | **1,513**   |   |   |   | 2,085 |   |
| Deferred                  income                  taxes                                                                                                                |   | ** **                                    | **3,357**   |   |   |   | 3,928 |   |
| Total                  current                  assets                                                                                                                           |   | ** **                                    | **117,742** |   |   |   | 103,906 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                          |        |   |   |   |   |   |
| Property,                  plant and equipment,                  net                                                                                                   |   | ** **                                    | **47,662**  |   |   |   | 49,159 |   |
| Goodwill                                                                                                                                                               |   | ** **                                    | **9,072**   |   |   |   | 9,072 |   |
| Other                  assets                                                                                                                                          |   | ** **                                    | **969**     |   |   |   | 541 |   |
| Total                  assets                                                                                                                                                    |   | **$**                                         | **175,445** |   |   | $ | 162,678 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                          |        |   |   |   |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                          |        |   |   |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                          |        |   |   |   |   |   |
| Current                  maturities of long-term                  debt                                                                                                                |   | **$**                                         | **2,857**   |   |   | $ | 2,857 |   |
| Accounts                  payable                                                                                                                                                     |   | ** **                                    | **17,432**  |   |   |   | 17,789 |   |
| Accrued                  salaries, wages and                  benefits                                                                                                                |   | ** **                                    | **9,407**   |   |   |   | 9,868 |   |
| Other                  accrued                  expenses                                                                                                                              |   | ** **                                    | **2,637**   |   |   |   | 1,356 |   |
| Total                  current                  liabilities                                                                                                                                |   | ** **                                    | **32,333**  |   |   |   | 31,870 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                          |        |   |   |   |   |   |
| Long-term                  debt, exclusive of current                  maturities                                                                                      |   | ** **                                    | **29,286**  |   |   |   | 5,714 |   |
| Deferred                  income                  taxes                                                                                                                |   | ** **                                    | **6,475**   |   |   |   | 7,422 |   |
| Other                  long-term                  liabilities                                                                                                          |   | ** **                                    | **8,430**   |   |   |   | 8,025 |   |
| Total                  liabilities                                                                                                                                                         |   | ** **                                    | **76,524**  |   |   |   | 53,031 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                          |        |   |   |   |   |   |
| **STOCKHOLDERS’                  EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                          |        |   |   |   |   |   |
| Common                  stock,                  $.02 par value, 25,000,000 shares authorized10,332,179                  and 10,928,610 shares issued                  and outstanding                                                                                                                                                                                                                                                                                                                                                                                                                           |   | ** **                                    | **207**     |   |   |   | 219 |   |
| Capital                  in                  excess of par                  value                                                                                      |   | ** **                                    | **548**     |   |   |   | 59 |   |
| Retained                  earnings                                                                                                                                     |   | ** **                                    | **99,066**  |   |   |   | 114,189 |   |
| Accumulated                  other comprehensive                  loss                                                                                                 |   | ** **                                    | **(900**    | **)** |   |   | (4,820 | ) |
| Total                  stockholders’                  equity                                                                                                                    |   | ** **                                    | **98,921**  |   |   |   | 109,647 |   |
| Total                  liabilities and stockholders’                  equity                                                                                                         |   | **$**                                         | **175,445** |   |   | $ | 162,678 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                          |        |   |   |   |   |   |

----

**STANLEY        FURNITURE COMPANY, INC.**

|                                                                               |   | Three                  Months |                          |   | Nine                  Months |   |
|------------------------------------------------------------------------------------|--------|-------------------------------|-------------------------------|--------|------------------------------|--------|
|                                                                               |   | Ended                         |                          |   | Ended                        |   |
|                                                                               |   | **September**                 |                          |   | September                    |   |   | **September** |   |   | September |   |
|                                                                               |   | ** **                    | **29,                  2007** |   |                         |   | 30,                  2006 |   |   | ** ** | **29,                  2007** |   |   |   | 30,                  2006 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Net                  sales                                                         |   | **$**                         | **73,181**                    |   |                         | $      | 75,911 |   |   | **$** | **216,011** |   |   | $ | 236,911 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of                  sales                                    |   | ** **                    | **60,432**                    |   |                         |   | 60,951 |   |   | ** ** | **176,128** |   |   |   | 184,575 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  profit                                                      |   | ** **                    | **12,749**                    |   |                         |   | 14,960 |   |   | ** ** | **39,883** |   |   |   | 52,336 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses                      |   | ** **                    | **9,608**                     |   |                         |   | 9,996 |   |   | ** ** | **30,116** |   |   |   | 32,447 |   |
| Pension                  plan                  termination charge (see note 4)     |   | ** **                    |                          |   |                         |   |   |   |   | ** ** | **6,605** |   |   |   |   |   |
| Operating                  income                                                  |   | ** **                    | **3,141**                     |   |                         |   | 4,964 |   |   | ** ** | **3,162** |   |   |   | 19,889 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Other                  income,                  net                                |   | ** **                    | **79**                        |   |                         |   | 91 |   |   | ** ** | **187** |   |   |   | 252 |   |
| Interest                  income                                                   |   | ** **                    | **139**                       |   |                         |   | 76 |   |   | ** ** | **325** |   |   |   | 332 |   |
| Interest                  expense                                                  |   | ** **                    | **955**                       |   |                         |   | 537 |   |   | ** ** | **2,299** |   |   |   | 1,570 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                  before income                  taxes                       |   | ** **                    | **2,404**                     |   |                         |   | 4,594 |   |   | ** ** | **1,375** |   |   |   | 18,903 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                  taxes                                                      |   | ** **                    | **769**                       |   |                         |   | 1,598 |   |   | ** ** | **440** |   |   |   | 6,578 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                        |   | **$**                         | **1,635**                     |   |                         | $      | 2,996 |   |   | **$** | **935** |   |   | $ | 12,325 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per                  share:                              |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                              |   | **$**                         | **.16**                       |   |                         | $      | .26 |   |   | **$** | **.09** |   |   | $ | 1.04 |   |
| Diluted                                                                            |   | **$**                         | **.16**                       |   |                         | $      | .26 |   |   | **$** | **.09** |   |   | $ | 1.01 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding:                              |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                              |   | ** **                    | **10,312**                    |   |                         |   | 11,396 |   |   | ** ** | **10,521** |   |   |   | 11,861 |   |
| Diluted                                                                            |   | ** **                    | **10,503**                    |   |                         |   | 11,657 |   |   | ** ** | **10,744** |   |   |   | 12,147 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  dividend                  declared and paid per common share |   | **$**                         | **.10**                       |   |                         | $      | .08 |   |   | **$** | **.30** |   |   | $ | .24 |   |
|                                                                               |   |                          |                          |   |                         |   |   |   |   |   |   |   |   |   |   |   |

----

**STANLEY        FURNITURE COMPANY, INC.**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Nine                  Months Ended |                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **September**                      |                          |   | September |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | ** **                         | **29,                  2007** |   |   |   | 30,                  2006 |   |
| **Cash                  flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                               |                          |   |   |   |   |   |
| Cash                  received                  from                  customers                                                                                                       |   | **$**                              | **212,857**                   |   |   | $ | 234,933 |   |
| Cash                  paid to                  suppliers and                  employees                                                                                               |   | ** **                         | **(204,407**                  | **)** |   |   | (199,742 | ) |
| Interest                  paid,                  net                                                                                                                                  |   | ** **                         | **(1,488**                    | **)** |   |   | (1,335 | ) |
| Income                  taxes                  paid,                  net                                                                                                             |   | ** **                         | **(3,537**                    | **)** |   |   | (8,612 | ) |
| Net                  cash provided by operating                  activities                                                                                                                               |   | ** **                         | **3,425**                     |   |   |   | 25,244 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |                          |   |   |   |   |   |
| **Cash                  flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                               |                          |   |   |   |   |   |
| Capital                  expenditures                                                                                                                                                 |   | ** **                         | **(3,206**                    | **)** |   |   | (2,023 | ) |
| Purchase                  of                  other                  assets                                                                                                           |   | ** **                         | **(28**                       | **)** |   |   | (17 | ) |
| Net                  cash (used) by investing                  activities                                                                                                                                 |   | ** **                         | **(3,234**                    | **)** |   |   | (2,040 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |                          |   |   |   |   |   |
| **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                                                                                            |   | ** **                         | **(13,557**                   | **)** |   |   | (28,282 | ) |
| Proceeds                  from                  insurance policy                  loans                                                                                               |   | ** **                         | **1,386**                     |   |   |   | 1,241 |   |
| Dividends                  paid                                                                                                                                                       |   | ** **                         | **(3,161**                    | **)** |   |   | (2,859 | ) |
| Proceeds                  from                  exercised stock                  options                                                                                              |   | ** **                         | **532**                       |   |   |   | 713 |   |
| Tax                  benefit                  from exercise of stock                  options                                                                                         |   | ** **                         | **32**                        |   |   |   | 255 |   |
| Net                  cash provided (used) by financing                  activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | ** **                         | **8,804**                     |   |   |   | (30,360 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |                          |   |   |   |   |   |
| Net                  increase                  (decrease) in                  cash                                                                                                    |   | ** **                         | **8,995**                     |   |   |   | (7,156 | ) |
| Cash                  at                  beginning of                  period                                                                                                        |   | ** **                         | **6,269**                     |   |   |   | 12,556 |   |
| **Cash                  at end of                  period                                                                                    **                                                           |   | **$**                              | **15,264**                    |   |   | $ | 5,400 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |                          |   |   |   |   |   |
|  **Reconciliation                of net income to net cash provided by operating                activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                               |                          |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |       |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|--------|--------|--------|
| Net                  income                  (loss)                                                                                          |   | **$**      | **935**    |   |   | $      | 12,325 |   |
| Depreciation                  and                  amortization                                                                                                  |   | ** ** | **4,562**  |   |   |   | 4,368 |   |
| Pension                  termination                                                                                                                             |   | ** ** | **5,002**  |   |   |   |   |   |
| Deferred                  income                  taxes                                                                                                          |   | ** ** | **(2,290** | **)**  |   |   | (758 | ) |
| Tax                  benefit from exercise of stock                  options                                                                                     |   | ** ** | **(32**    | **)**  |   |   | (255 | ) |
| Stock-based                  compensation                                                                                                                        |   | ** ** | **492**    |   |   |   | 268 |   |
| Other,                  net                                                                                                                                      |   | ** ** | **194**    |   |   |   | 23 |   |
| Changes                  in assets and                  liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |       |   |   |   |   |   |
| Accounts                  receivable                                                                                                                                            |   | ** ** | **(3,010** | **)**  |   |   | (1,314 | ) |
| Inventories                                                                                                                                                                     |   | ** ** | **(2,974** | **)**  |   |   | 10,195 |   |
| Prepaid                  expenses and other current                  assets                                                                                                     |   | ** ** | **(959**   | **)**  |   |   | (406 | ) |
| Accounts                  payable                                                                                                                                               |   | ** ** | **(457**   | **)**  |   |   | 1,822 |   |
| Accrued                  salaries, wages and                  benefits                                                                                                          |   | ** ** | **481**    |   |   |   | (1,262 | ) |
| Other                  accrued                  expenses                                                                                                                        |   | ** ** | **1,384**  |   |   |   | 777 |   |
| Other                  assets                                                                                                                                                   |   | ** ** | **(308**   | **)**  |   |   | (265 | ) |
| Other                  long-term                  liabilities                                                                                                                   |   | ** ** | **405**    |   |   |   | (274 | ) |
| Net                  cash provided by operating                  activities                                                                                                                              |   | **$**      | **3,425**  |   |   | $      | 25,244 |   |

----

**STANLEY        FURNITURE COMPANY, INC.**

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

**Property,        Plant and Equipment**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **September** |                          |   | December |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------------------------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | ** **    | **29,                  2007** |   |     |   | 31,                  2006 |   |
| Land                  and                  buildings                                                                                                  |   | **$**         | **41,372**                    |   |     | $      | 40,887 |   |
| Machinery                  and                  equipment                                                                                             |   | ** **    | **82,116**                    |   |     |   | 79,051 |   |
| Office                  furniture and                  equipment                                                                                      |   | ** **    | **1,452**                     |   |     |   | 1,452 |   |
| Construction                  in                  process                                                                                             |   | ** **    | **1,387**                     |   |     |   | 2,071 |   |
| Property,                  plant and equipment, at                  cost                                                                                             |   | ** **    | **126,327**                   |   |     |   | 123,461 |   |
| Less                  accumulated                  depreciation                                                                                       |   | ** **    | **78,665**                    |   |     |   | 74,302 |   |
| Property,                  plant and equipment,                  net                                                                                                 |   | **$**         | **47,662**                    |   |     | $      | 49,159 |   |

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **September** |                          |   | December |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------------------------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | ** **    | **29,                  2007** |   |     |   | 31,                  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 |                          |   | Nine                  Months |       |
|---------------------------------------------------|--------|-------------------------------|-------------------------------|--------|------------------------------|------------|
|                                              |   | Ended                         |                          |   | Ended                        |       |
|                                              |   | **September**                 |                          |   | **September**                |       |   | **September** |   |   | **September** |   |
|                                              |   | ** **                    | **29,                  2007** |   |                         | ** ** | **30,                  2006** |   |   | ** ** | **29,                  2007** |   |   | ** ** | **30,                  2006** |   |
| Interest                  cost                    |   | **$**                         | **28**                        |   |                         | **$**      | **232** |   |   | **$** | **243** |   |   | ** ** | **696** |   |
| Expected                  return on plan assets   |   |                          |                          |   |                         | ** ** | **(245** | **)** |   | ** ** | **(188** | **)** |   | ** ** | **(736** | **)** |
| Amortization                  of accumulated loss |   | ** **                    | **1**                         |   |                         | ** ** | **125** |   |   | ** ** | **218** |   |   | ** ** | **375** |   |
| Net                  cost                         |   | ** **                    | **29**                        |   |                         | ** ** | **112** |   |   | ** ** | **273** |   |   | ** ** | **335** |   |
| Settlement                  expense               |   |                          |                          |   |                         | ** ** | **341** |   |   | ** ** | **6,606** |   |   | ** ** | **652** |   |
| Total                  expense                    |   | **$**                         | **29**                        |   |                         | **$**      | **453** |   |   | **$** | **6,879** |   |   | **$** | **987** |   |

|                                                                       |   | Three                  Months |                          |   | Nine                  Months |       |
|----------------------------------------------------------------------------|--------|-------------------------------|-------------------------------|--------|------------------------------|------------|
|                                                                       |   | Ended                         |                          |   | Ended                        |       |
|                                                                       |   | **September**                 |                          |   | **September**                |       |   | **September** |   |   | **September** |   |
|                                                                       |   | ** **                    | **29,                  2007** |   |                         | ** ** | **30,                  2006** |   |   | ** ** | **29,                  2007** |   |   | ** ** | **30,                  2006** |   |
| Service                  cost                                              |   | **$**                         | **20**                        |   |                         | **$**      | **25** |   |   | **$** | **62** |   |   | **$** | **73** |   |
| Interest                  cost                                             |   | ** **                    | **40**                        |   |                         | ** ** | **43** |   |   | ** ** | **119** |   |   | ** ** | **130** |   |
| Amortization                  of transition obligation                     |   | ** **                    | **32**                        |   |                         | ** ** | **33** |   |   | ** ** | **97** |   |   | ** ** | **98** |   |
| Amortization                  of prior service cost                        |   | ** **                    | **(2**                        | **)**  |                         |       |   |   |   | ** ** | **(6** | **)** |   |   |   |   |
| Amortization                  of accumulated loss                          |   | ** **                    | **6**                         |   |                         | ** ** | **10** |   |   | ** ** | **17** |   |   | ** ** | **31** |   |
| Net                  periodic postretirement benefit                  cost |   | **$**                         | **96**                        |   |                         | **$**      | **111** |   |   | **$** | **289** |   |   | **$** | **332** |   |

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

|                                                                                                                   |   | Three                  Months |                          |   | Nine                  Months |       |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------------------------|--------|------------------------------|------------|
|                                                                                                                   |   | Ended                         |                          |   | Ended                        |       |
|                                                                                                                   |   | **September**                 |                          |   | **September**                |       |   | **September** |   |   | **September** |   |
|                                                                                                                   |   | ** **                    | **29,                  2007** |   |                         | ** ** | **30,                  2006** |   |   | ** ** | **29,                  2007** |   |   | ** ** | **30,                  2006** |   |
| Weighted                  average shares outstandingfor                  basic calculation                             |   | ** **                    | **10,312**                    |   |                         | ** ** | **11,396** |   |   | ** ** | **10,521** |   |   | ** ** | **11,861** |   |
| Add:                  Effect                  of dilutive stock options                                                |   | ** **                    | **191**                       |   |                         | ** ** | **261** |   |   | ** ** | **223** |   |   | ** ** | **286** |   |
| Weighted                  average shares outstandingAdjusted                  for diluted                  calculation |   | ** **                    | **10,503**                    |   |                         | ** ** | **11,657** |   |   | ** ** | **10,744** |   |   | ** ** | **12,147** |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                          |   |       |    |   |                        |       |     |     |   |       | 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, January 1, 2007**                                                                                                                                                                                                                                                                                                                                                                        |   | ** ** | **219** |   |                        | ** ** | **59**   |     |   | ** ** | **114,211**   |   |   | ** ** | **(4,820** | **)** |
| **Net                  Income                                                       **                                                     |   |       |    |   |                        |       |     |     |   | ** ** | **935**       |   |   |   |   |   |
| **Exercise                  of stock                  options                                                       **                     |   | ** ** | **1**   |   |                        | ** ** | **531**  |     |   |       |          |   |   |   |   |   |
| **Tax                  benefit on exercise of stock                  options**                                                                                                                                                                                                                                                                                                                                                |   |       |    |   |                        | ** ** | **91**   |     |   |       |          |   |   |   |   |   |
| **Stock                  repurchases                                                       **                                              |   | ** ** | **(13** | **)**  |                        | ** ** | **(625** | **)**    |   | ** ** | **(12,919**   | **)**  |   |   |   |   |
| **Stock-based                  compensation                                                       **                                       |   |       |    |   |                        | ** ** | **492**  |     |   |       |          |   |   |   |   |   |
| **Cash                  dividends paid, $.30 per                  share**                                                                                                                                                                                                                                                                                                                                                     |   |       |    |   |                        |       |     |     |   | ** ** | **(3,161**    | **)**  |   |   |   |   |
| **Pension                  termination                                                       **                                            |   |       |    |   |                        |       |     |     |   |       |          |   |   | ** ** | **3,739** |   |
| **Adjustment                  to net periodic benefit                  cost**                                                                                                                                                                                                                                                                                                                                                 |   | ** ** |    |   |                        |       |     |     |   | ** ** |          |   |   | ** ** | **181** |   |
| **Balance,                  September 29,                  2007                                                          ** |   | **$**      | **207** |   |                        | **$**      | **548**  |     |   | **$**      | **99,066**    |   |   | **$** | **(900** | **)** |

**Income        Taxes**

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

**Results        of        Operations**

----

|                                                                |   | Three                  Months |                          |   | Nine                  Months |       |
|---------------------------------------------------------------------|--------|-------------------------------|-------------------------------|--------|------------------------------|------------|
|                                                                |   | Ended                         |                          |   | Ended                        |       |
|                                                                |   | **September**                 |                          |   | **September**                |       |   | **September** |   |   | **September** |   |
|                                                                |   | ** **                    | **29,                  2007** |   |                         | ** ** | **30,                  2006** |   |   | ** ** | **29,                  2007** |   |   | ** ** | **30,                  2006** |   |
| Net                  sales                                          |   | ** **                    | **100.0**                     | **%**  |                         | ** ** | **100.0** | **%** |   | ** ** | **100.0** | **%** |   | ** ** | **100.0** | **%** |
| Cost                  of                  sales                     |   | ** **                    | **82.6**                      |   |                         | ** ** | **80.3** |   |   | ** ** | **81.5** |   |   | ** ** | **77.9** |   |
| Gross                  profit                                       |   | ** **                    | **17.4**                      |   |                         | ** ** | **19.7** |   |   | ** ** | **18.5** |   |   | ** ** | **22.1** |   |
| Selling,                  general and administrative expenses       |   | ** **                    | **13.1**                      |   |                         | ** ** | **13.2** |   |   | ** ** | **13.9** |   |   | ** ** | **13.7** |   |
| Pension                  plan                  termination charge   |   |                          |                          |   |                              |       |   | ** ** | **3.1** |   |   |  |   |
| Operating                  income                                   |   | ** **                    | **4.3**                       |   |                         | ** ** | **6.5** |   |   | ** ** | **1.5** |   |   | ** ** | **8.4** |   |
| Other                  income,                  net                 |   | ** **                    | **.1**                        |   |                         | ** ** | **.1** |   |   | ** ** | **.1** |   |   | ** ** | **.1** |   |
| Interest                  income                                    |   | ** **                    | **.2**                        |   |                         | ** ** | **.1** |   |   | ** ** | **.1** |   |   | ** ** | **.1** |   |
| Interest                  expense                                   |   | ** **                    | **1.3**                       |   |                         | ** ** | **.7** |   |   | ** ** | **1.1** |   |   | ** ** | **.6** |   |
| Income                  (loss) before income                  taxes |   | ** **                    | **3.3**                       |   |                         | ** ** | **6.0** |   |   | ** ** | **.6** |   |   | ** ** | **8.0** |   |
| Income                  taxes                                       |   | ** **                    | **1.1**                       |   |                         | ** ** | **2.1** |   |   | ** ** | **.2** |   |   | ** ** | **2.8** |   |
| Net                  income (loss)                                  |   | ** **                    | **2.2**                       | **%**  |                         | ** ** | **3.9** | **%** |   | ** ** | **.4** | **%** |   | ** ** | **5.2** | **%** |

**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 third 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)                           |   |
|                                                            |   |                       |    |   |                        |   |   |                                                  |   |   |                                                    |   |
| July                  1 to                  August 4, 2007      |   |                       | 117,500 |   |                        | $      | 19.14  |                                                  |   |   | 117,500                                                 |   |   | $ | 19,042,193 |   |
| August                  5 to                  September 1, 2007 |   |                       |    |   |                        |   |   |                                                  |   |   |                                                    |   |   | $ | 19,042,193 |   |
| September                  2                  to Sept. 29, 2007 |   |                       |    |   |                        |   |   |                                                  |   |   |                                                    |   |   | $ | 19,042,193 |   |
|                                                            |   |                       |    |   |                        |   |   |                                                  |   |   |                                                    |   |   |   |   |   |
| Total                                                           |   |                       | 117,500 |   |                        | $      | 19.14  |                                                  |   |   | 117,500                                                 |   |   |   |   |   |

| (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. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM        5.                      Other        Information**

----

| **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).                                                                                                                                                                                                                                                                       |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
| 4.1       | Amendment                    to                    Amended and Restated Note Purchase and Private Shelf Agreements                    dated as                    of October 12, 2007, among the Registrant, The Prudential Insurance                    Company of America (“Prudential”), Hartford Life Insurance Company, Medica                    Health Plans, Pruco Life Insurance Company of New Jersey, Prudential                    Retirement Insurance and Annuity Company, Mutual of Omaha Insurance                    Company. (1) |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
| 10.1      | Fourth                    Amendment, to the revolving credit facility dated August 29,                    2003, between                    the Registrant and Wachovia Bank (incorporated by reference to                    Exhibit                    10.1 to the Registrant’s Form 10-Q (Commission File No. 0-14938) for the                    quarter ended June 30, 2007.)                                                                                                                                                                        |   |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
| 10.2      | Fifth                    Amendment, dated October 12, 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:                  October                  16, 2007 |   | **STANLEY                  FURNITURE COMPANY, INC.**                                               |
|----------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|
|                                                     |   | By:                  /s/                  Douglas I. Payne                                         |
|                                                     |   | Douglas                  I.                  Payne                                                 |
|                                                     |   | Executive                  V.P. – Finance & AdministrationAnd                  Secretary |
|                                                     |   | (Principal                  Financial and Accounting                  Officer)                     |