• Revenue: $23.3 million for Q3 fiscal '25, down from $23.8 million in the prior year quarter.
• Baby Boom Sales: Added $3.8 million in sales this quarter.
• Gross Profit Margin: 26.1%, down from 27% in Q3 fiscal '24.
• Marketing and Administrative Expenses: $4.4 million, up from $4.1 million in the prior year quarter.
• Net Income: $893,000 or $0.09 per diluted share, compared to $1.7 million or $0.17 per diluted share in the prior year quarter.
• Cash and Cash Equivalents: $1.1 million at the end of Q3, up from $829,000 at the end of fiscal '24.
• Borrowings: $20.9 million under the credit facility, up from $8.1 million at the end of fiscal '24.
• Cash Flow from Operations: $7 million year-to-date through Q3, up from $4.1 million in the same period last year.
• Inventory Balance: Declined to $32.4 million from $34.9 million in December '23.
• Quarterly Dividend: Paid $0.08 per share and declared the next dividend to be paid in April.

• Warning! GuruFocus has detected 6 Warning Signs with CRWS.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Crown Crafts Inc (NASDAQ:CRWS) successfully integrated its recent acquisition, Baby Boom, which contributed $3.8 million in sales this quarter.
• The company maintained a strong financial position with cash and cash equivalents increasing to $1.1 million from $829,000 at the end of fiscal '24.
• Year-to-date cash flow from operations increased to $7 million compared to $4.1 million in the same period last year.
• Crown Crafts Inc (NASDAQ:CRWS) continues to pay regular quarterly dividends, maintaining shareholder value.
• The company is actively exploring new product categories and refreshing existing ones, positioning itself for future growth.

Negative Points

• Sales for the third quarter decreased to $23.3 million from $23.8 million in the prior year, primarily due to lower online toy sales and the loss of a major retailer bid program.
• Gross profit margin declined to 26.1% from 27% in the previous year, impacted by changes in product mix and higher warehouse lease costs.
• Net income for the quarter dropped to $893,000 or $0.09 per diluted share, compared to $1.7 million or $0.17 per diluted share in the prior year.
• Interest expenses increased by $183,000 due to higher borrowings related to the Baby Boom acquisition.
• The company faces potential challenges from a 10% tariff on Chinese imports, which could impact product pricing and sourcing strategies.

Q & A Highlights

Q: Could you provide more details on the decision-making process for the new warehouse location? A: Olivia Elliott, President and CEO, explained that cost is a significant factor, but they are also considering lead times and freight costs. They are leaning towards a West Coast location due to overall benefits, but are still gathering information and quotes.

Q: Can you update us on the diaper bag business and related initiatives? A: Olivia Elliott noted positive meetings with potential licensors and retailers. They have refreshed designs and expect new placements in 2026, as most 2025 lines were set before their acquisition.

Q: How did the Manhattan Toy brand perform during the holiday season, and what is the status with Walmart? A: Olivia Elliott stated that holiday sales were disappointing, with a decline in the Manhattan Toy brand as consumers opted for less expensive toys. However, Walmart placements are performing well, and they expect to maintain them for another year.

Q: What is the impact of the 10% tariff increase on Chinese imports, and how are you addressing it? A: Olivia Elliott mentioned that they are working with suppliers to roll back prices to cover most of the tariff increase. While some price adjustments may be necessary, they aim to minimize the impact on customers and consumers.

Q: What are the plans for the Minneapolis headquarters and other real estate leases? A: Olivia Elliott confirmed that they plan to downsize the Minneapolis office due to its current size being too large. They intend to relocate to a smaller, less expensive location outside downtown once the lease expires.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.