Core Viewpoint - Crown Crafts, Inc. reported a decline in revenue and earnings for the first quarter of fiscal 2026, primarily due to tariff pressures and inventory management challenges, while the stock has shown a modest gain since the earnings report [1][2][4]. Revenue and Earnings Performance - Crown Crafts posted net sales of $15.5 million, down 4.5% from $16.2 million in the prior-year period [2] - Gross profit decreased by 11.3% to $3.5 million, representing 22.7% of sales compared to 24.5% a year ago [2] - The company reported a net loss of $1.1 million, or $0.10 per share, compared to a net loss of $0.3 million, or $0.03 per share, in the same quarter last year [2] Segment Results - Sales of bedding and diaper bags increased by 8.6% year over year to $6.8 million, while sales of bibs, toys, and disposable products declined by 12.8% to $8.7 million [3] Key Business Metrics - Gross margin slipped by 180 basis points year over year due to higher costs of imported goods from China [4] - Marketing and administrative expenses rose by 10.6% to $4.7 million, increasing to 30.5% of sales from 26.3% a year earlier [4] - Interest expense surged by 180.2% to $0.3 million from $0.1 million in the prior-year period [4] Balance Sheet Overview - Inventories stood at $31.6 million as of June 29, 2025, up from $27.8 million at fiscal year-end [5] - Cash and equivalents declined to $0.2 million from $0.5 million at fiscal year-end [5] - Long-term debt fell to $11.9 million from $16.5 million at fiscal year-end [5] - Shareholders' equity slipped to $37.9 million from $39.6 million at fiscal year-end [5] Management Commentary - Management highlighted tariffs as a key challenge, with CEO Olivia Elliott noting consumer uncertainty and supplier disruption [6] - The Baby Boom acquisition contributed $2.1 million in sales during the quarter [6] - Price increases are being implemented to offset tariff impacts, with full effects expected by the end of September [6] Future Outlook - Management expressed cautious optimism regarding July sales trends and the renewal and expansion of the Disney licensing agreement [7] - CFO Claire Spencer emphasized the company's financial flexibility, with $12.2 million available under its revolving line of credit [7] - Management indicated that restocking by retailers should aid demand in upcoming quarters [11] Other Developments - Crown Crafts declared a quarterly dividend of $0.08 per share, payable on October 3, 2025 [12] - The company announced the extension of its Disney licensing agreement, expanding product categories and geographic reach [12] - Progress has been made in stabilizing the Manhattan Toy brand, with new product lines gaining traction at major retailers [12]

Financial Data and Key Metrics Changes - First quarter net sales were $15.5 million, a 4.5% decrease compared to the previous year, driven by declines in sales of bibs, toys, and disposable products, partially offset by increases in bedding and diaper bags due to the Baby Boom acquisition [6][7] - Gross profit decreased by $448,000 from the prior year, with gross profit margin declining from 24.5% to 22.7% of net sales, primarily due to increased tariff costs on imports from China [7][8] - GAAP net loss for the first quarter was $1.1 million, or a $0.10 loss per diluted share, attributed to increased tariffs and inventory shortages [8][9] - Cash and cash equivalents totaled $227,000, down from $521,000 at the end of the previous fiscal year, while inventories increased by 13.6% to $31.6 million [9][10] Business Line Data and Key Metrics Changes - Sales of bibs, toys, and disposable products saw a decline, while sales of bedding and diaper bags increased due to the Baby Boom acquisition [6][7] - Marketing and administrative expenses rose from 26.3% to 30.5% of net sales, reflecting increased costs associated with the Baby Boom acquisition and higher advertising expenses [7][8] Market Data and Key Metrics Changes - The company noted a significant reduction in inventory levels at major retailers, with one retailer's supply dropping from ten weeks to one to two weeks, indicating potential pent-up demand [31][32] Company Strategy and Development Direction - The company is focused on navigating the challenges posed by tariffs and inflation while executing its long-term strategic plan, including expanding its product portfolio and renewing its license agreement with Disney [4][11] - The acquisition of Baby Boom is expected to drive growth, and the company is optimistic about sales trends observed in July [4][11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the fiscal year, despite ongoing challenges from tariffs and inflation impacting consumer spending [4][11] - The company is hopeful that price increases implemented in response to tariffs will help restore profitability [17][36] Other Important Information - The company declared an $0.08 per share cash dividend, maintaining its commitment to returning value to shareholders [10] Q&A Session Summary Question: Target's Direct Sourcing Strategy - Management hopes that Target's potential reduction in direct sourcing could create opportunities for Crown Crafts to regain programs previously taken over by Target [16] Question: Profitability with 30% Tariff - Management is optimistic about mitigating tariff impacts through price increases and believes profitability can be achieved in the future [17] Question: Expanding Manhattan Toy Sales Overseas - Management sees opportunities for expanding Manhattan Toy sales overseas, especially after consolidating distribution channels [19] Question: Promotion of Products Featured on Netflix - Management confirmed that they are promoting products featured in popular shows and leveraging social media for marketing [20][21] Question: Stabilization of Manhattan Toy Operations - Management believes that operations at Manhattan Toy have stabilized and are seeing improvements in product lines [22][23] Question: Sales Feedback from LEGOLAND Shanghai - Initial sales for plush figures at LEGOLAND Shanghai exceeded expectations, indicating strong demand [24] Question: Sales Performance of Stella Dolls - Management reported that sales of redesigned Stella dolls are performing well, despite previous inventory challenges [25][26] Question: Dividend Sustainability - Management expressed confidence in the company's cash flow and balance sheet, indicating no immediate concerns regarding the dividend [36]

Core Viewpoint - Crown Crafts, Inc. reported a modest decline in net sales and gross profit for the first quarter of fiscal year 2026, primarily due to the impact of tariffs and inventory shortages, despite the contribution from the Baby Boom acquisition [3][4][5]. Financial Performance - Net sales decreased to $15.5 million for the three months ended June 29, 2025, down from $16.2 million for the same period in the prior year, representing a decrease of $734,000 or 4.5% [4][9]. - Gross profit fell by $448,000, resulting in a gross profit margin decrease from 24.5% to 22.7% of net sales compared to the prior year [5][9]. - The company reported a net loss of $1.10 million, or $0.10 per share, compared to a net loss of $0.3 million, or $0.03 per share, in the prior-year quarter [9][14]. Sales Breakdown - Sales of bedding and diaper bags increased by $540,000, while sales of bibs, toys, and disposable products decreased by $1.3 million [4]. - The Baby Boom acquisition contributed $2.1 million in net sales during the quarter, but overall sales were negatively impacted by inventory shortages due to high tariffs [3][4]. Expenses - Marketing and administrative expenses rose by $454,000, increasing from 26.3% of net sales to 30.5% of net sales compared to the prior year [6][9]. Dividend Announcement - The Board of Directors declared a quarterly cash dividend of $0.08 per share on the Company's Series A common stock, payable on October 3, 2025, to stockholders of record as of September 12, 2025 [7][9]. Company Overview - Crown Crafts, Inc. designs, markets, and distributes a variety of infant, toddler, and juvenile consumer products, and is one of America's largest producers in this sector [9][10].

[Introduction](index=1&type=section&id=Introduction) [Announcement](index=1&type=section&id=Announcement) Crown Crafts, Inc. announced its financial results for the first quarter of fiscal year 2026, which concluded on June 29, 2025 - Crown Crafts, Inc. reported financial results for the first quarter fiscal year 2026, ending June 29, 2025[1](index=1&type=chunk)[2](index=2&type=chunk) [First Quarter Fiscal 2026 Summary](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Summary) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Olivia Elliott noted that Q1 results aligned with fiscal year 2025 themes, highlighting the $2.1 million sales contribution from the Baby Boom acquisition, but also the persistent negative impact of tariffs on consumers and suppliers, leading to a modest decline in sales and gross profit - Baby Boom acquisition added **$2.1 million** in net sales during Q1 FY26[4](index=4&type=chunk) - Tariffs and uncertainty negatively impacted consumers and suppliers, leading to a modest decline in sales and gross profit[4](index=4&type=chunk) - Company strategy focuses on navigating the tariff environment, mitigating impact, and increasing sales and market share[4](index=4&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The first quarter saw a decrease in net sales to $15.5 million, a decline in gross profit percentage to 22.7%, and an increased net loss of ($1.10 million) or ($0.10) per share, primarily due to increased tariffs First Quarter Fiscal 2026 Key Financial Highlights | Metric | Q1 FY26 (June 29, 2025) | Q1 FY25 (June 30, 2024) | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $15.5 million | $16.2 million | ($0.7 million) | -4.5% | | Gross Profit % | 22.7% | 24.5% | -1.8% | -7.3% | | Net Loss | ($1.10 million) | ($0.3 million) | ($0.8 million) | -266.7% | | Loss Per Share | ($0.10) | ($0.03) | ($0.07) | -233.3% | - Q1 results reflect the impact of increased tariffs[7](index=7&type=chunk) - Declared quarterly dividend of **$0.08 per share** of Series A common stock[7](index=7&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) [Net Sales Performance](index=1&type=section&id=Net%20Sales%20Performance) Net sales for Q1 FY26 decreased by 4.5% to $15.5 million from $16.2 million in the prior year, impacted by inventory shortages despite a $2.1 million contribution from the Baby Boom acquisition Net Sales Performance (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 | Q1 FY25 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $15.5 million | $16.2 million | ($0.734 million) | -4.5% | - Baby Boom acquisition added **$2.1 million** in net sales[5](index=5&type=chunk) - Sales of bedding and diaper bags increased by **$540,000**, while sales of bibs, toys, and disposable products decreased by **$1.3 million**[5](index=5&type=chunk) - Sales across all categories were negatively affected by inventory shortages due to the company's strategy to minimize high tariff impacts[5](index=5&type=chunk) [Gross Profit Analysis](index=1&type=section&id=Gross%20Profit%20Analysis) Gross profit decreased by $448,000, resulting in a gross profit percentage decline to 22.7% from 24.5%, primarily due to increased tariff costs on imported products Gross Profit Performance (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 | Q1 FY25 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | $3,518 thousand | $3,966 thousand | ($448 thousand) | | Gross Profit Percentage | 22.7% | 24.5% | -1.8% | - Decrease in gross profit primarily due to increased tariff costs associated with products imported from China[6](index=6&type=chunk) [Marketing and Administrative Expenses](index=2&type=section&id=Marketing%20and%20Administrative%20Expenses) Marketing and administrative expenses increased by $454,000 to 30.5% of net sales, driven by higher costs from the Baby Boom acquisition and increased advertising expenditures Marketing and Administrative Expenses (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 | Q1 FY25 | Change | | :--- | :--- | :--- | :--- | | Marketing and Administrative Expenses | $4,717 thousand | $4,263 thousand | $454 thousand | | As % of Net Sales | 30.5% | 26.3% | +4.2% | - Increased costs associated with the acquisition of Baby Boom and increased advertising costs contributed to the rise in expenses[8](index=8&type=chunk) [Corporate Actions](index=2&type=section&id=Corporate%20Actions) [Quarterly Cash Dividend](index=2&type=section&id=Quarterly%20Cash%20Dividend) The Board of Directors declared a quarterly cash dividend of $0.08 per share for Series A common stock, payable on October 3, 2025 - Quarterly cash dividend of **$0.08 per share** declared for Series A common stock[9](index=9&type=chunk) - Dividend payable on October 3, 2025, to stockholders of record on September 12, 2025[9](index=9&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Crown Crafts hosted a teleconference on August 13, 2025, to discuss Q1 results, with a replay available until November 13, 2025 - Teleconference held on August 13, 2025, at 8:00 a.m. CDT to discuss results[10](index=10&type=chunk) - Telephone replay available until November 13, 2025[10](index=10&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [About Crown Crafts, Inc.](index=2&type=section&id=About%20Crown%20Crafts,%20Inc.) Crown Crafts, Inc., founded in 1957, is a leading designer, marketer, and distributor of infant, toddler, and juvenile consumer products through various brands and channels - Crown Crafts, Inc. designs, markets, and distributes infant, toddler, and juvenile consumer products, founded in 1957[11](index=11&type=chunk) - Operates through wholly owned subsidiaries NoJo Baby & Kids, Inc. and Sassy Baby, Inc., marketing products under company-owned trademarks (Sassy®, Manhattan Toy®, NoJo®, Baby Boom®, Neat Solutions®) and licensed/private label programs[11](index=11&type=chunk) - Sales channels include mass merchants, large chain stores, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, wholesale clubs, internet-based retailers, and direct-to-consumers via company websites[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements based on management's expectations, subject to various known and unknown risks including economic conditions, tariffs, and competition - Forward-looking statements are based on management's current expectations and involve known and unknown risks and uncertainties[12](index=12&type=chunk) - Key risks include general economic conditions, impact of U.S. tariffs, changes in interest rates, consumer spending, raw material prices, competition, retail environment, ability to integrate acquisitions, customer concentration, dependence on third-party suppliers (including foreign), and third-party licenses[12](index=12&type=chunk) - The Company does not undertake to update forward-looking statements[12](index=12&type=chunk) [Contact Information](index=3&type=section&id=Contact%20Information) Contact details are provided for Crown Crafts' VP and CFO, Claire Spencer, and for Investor Relations via Three Part Advisors - Contact for Crown Crafts: Claire Spencer, VP and CFO (cspencer@crowncrafts.com)[13](index=13&type=chunk) - Investor Relations contact: Three Part Advisors (Steven Hooser, John McNamara - jmcnamara@threepa.com)[13](index=13&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a net loss of ($1.104 million) for Q1 FY26, significantly higher than the ($0.322 million) loss in Q1 FY25, driven by decreased net sales, lower gross profit percentage, and increased marketing and administrative expenses Consolidated Statements of Operations (Selected Data) | Metric (in thousands) | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $15,478 | $16,212 | | Gross profit | $3,518 | $3,966 | | Gross profit percentage | 22.7% | 24.5% | | Marketing and administrative expenses | $4,717 | $4,263 | | Loss from operations | ($1,199) | ($297) | | Loss before income tax benefit | ($1,383) | ($386) | | Income tax benefit | ($279) | ($64) | | Net loss | ($1,104) | ($322) | | Basic and diluted loss per share | ($0.10) | ($0.03) | | Weighted Average Shares Outstanding (Basic & Diluted) | 10,570 | 10,311 | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 29, 2025, total assets were $76.023 million, down from $81.154 million on March 30, 2025, with key changes in cash, accounts receivable, and inventories Consolidated Balance Sheets (Selected Data) | Metric (in thousands) | June 29, 2025 | March 30, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $227 | $521 | | Accounts receivable, net | $17,204 | $24,508 | | Inventories | $31,572 | $27,800 | | Total current assets | $51,242 | $55,303 | | Total assets | $76,023 | $81,154 | | Total current liabilities | $17,797 | $15,505 | | Long-term debt | $11,890 | $16,512 | | Shareholders' equity | $37,869 | $39,619 | | Total liabilities and shareholders' equity | $76,023 | $81,154 |

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company experienced decreased net sales and a wider net loss, alongside a reduction in total assets and operating cash flow, primarily due to increased inventories [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and shareholders' equity declined from March 30, 2025, to June 29, 2025, while inventories increased | Balance Sheet Items | June 29, 2025 ($ thousands) | March 30, 2025 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | 51,242 | 55,303 | | **Total Assets** | 76,023 | 81,154 | | **Total Current Liabilities** | 17,797 | 15,505 | | **Total Liabilities** | 38,154 | 41,535 | | **Total Shareholders' Equity** | 37,869 | 39,619 | - Inventories increased to **$31.6 million** as of June 29, 2025, from **$27.8 million** as of March 30, 2025, with nearly all being finished goods[28](index=28&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales decreased by 4.5% year-over-year, leading to a significantly wider net loss and diluted loss per share | Metric | Three Months Ended June 29, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | | Net sales | 15,478 | 16,212 | | Gross profit | 3,518 | 3,966 | | Loss from operations | (1,199) | (297) | | Net loss | (1,104) | (322) | | Diluted loss per share | $(0.10) | $(0.03) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased due to increased inventories, while cash used in financing activities also declined | Cash Flow Activity | Three Months Ended June 29, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 5,248 | 8,013 | | Net cash used in investing activities | (86) | (284) | | Net cash used in financing activities | (5,456) | (7,455) | | **Net decrease in cash** | **(294)** | **274** | [Notes to Financial Statements](index=8&type=section&id=Notes%20to%20Financial%20Statements) Notes detail the company's single segment operation, the Baby Boom acquisition, concentration risks, and a prior goodwill impairment charge - The company operates primarily in one principal segment: infant, toddler and juvenile products[23](index=23&type=chunk) - On July 19, 2024, the company acquired substantially all assets of Baby Boom Consumer Products, Inc. for a purchase price of **$18.0 million** in cash, funded by a term loan and borrowings under its revolving line of credit[29](index=29&type=chunk) - A non-cash goodwill impairment charge of **$13.8 million** was recorded during the three-month period ended March 30, 2025, resulting in no goodwill reported as of June 29, 2025[46](index=46&type=chunk) | Customer | % of Gross Sales (Q1 FY26) | % of Gross Sales (Q1 FY25) | | :--- | :--- | :--- | | Walmart Inc. | 45% | 39% | | Amazon.com, Inc. | 17% | 22% | | Target Corporation | 11% | <10% | - Sales of licensed products represented **50%** of gross sales in fiscal year 2025, with **21%** from license agreements with The Walt Disney Company[50](index=50&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes decreased net sales to tariff-driven inventory shortages and notes a decline in gross margin due to increased tariff costs | Metric | Q1 FY26 ($ thousands) | Q1 FY25 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Net Sales** | 15,478 | 16,212 | -4.5% | | Bedding and diaper bags | 6,791 | 6,251 | 8.6% | | Bibs, toys and disposable products | 8,687 | 9,961 | -12.8% | | **Gross Profit** | 3,518 | 3,966 | -11.3% | | Gross Margin | 22.7% | 24.5% | -1.8 p.p. | | **Marketing & Admin Expenses** | 4,717 | 4,263 | 10.6% | | **Net Loss** | (1,104) | (322) | 242.9% | - The decrease in net sales was attributed to inventory shortages resulting from a strategy to minimize the impact of high tariffs, which offset the **$2.1 million** in net sales added by the Baby Boom acquisition[62](index=62&type=chunk) - The decline in gross profit margin was primarily a result of increased tariff costs associated with products imported from China[63](index=63&type=chunk) - As of June 29, 2025, the company had **$7.7 million** outstanding on its revolving line of credit with **$12.2 million** available for borrowing[71](index=71&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=17&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on variable-rate debt, commodity price risk from China sourcing, and significant market concentration risk - A one percentage point increase in interest rates would decrease annual net income by approximately **$108,000**, based on the **$13.9 million** of variable-rate debt outstanding[77](index=77&type=chunk) - The company is exposed to commodity price risk from changes in the cost of cotton, oil, and labor in China, its primary sourcing location[78](index=78&type=chunk) - Significant market concentration risk exists, with the top two customers representing **66%** of gross sales and licensed products accounting for **50%** of gross sales in fiscal year 2025[79](index=79&type=chunk) [Item 4. Controls and Procedures](index=17&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to a material weakness in internal control over financial reporting, with remediation ongoing - The company's principal executive and financial officers concluded that disclosure controls and procedures were **not effective** as of June 29, 2025[80](index=80&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting concerning the review and approval of manual journal entries, as previously reported in the Form 10-K for the year ended March 30, 2025[81](index=81&type=chunk) - Remediation efforts include improving internal control policies for segregation of duties and enhancing the review process for manual journal entries[83](index=83&type=chunk)[86](index=86&type=chunk) [PART II – OTHER INFORMATION](index=19&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=19&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any legal proceedings expected to materially adversely affect its financial condition or operations - The company reports no material legal proceedings that would be expected to have a significant adverse impact on its business[88](index=88&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors have been reported since the last annual filing - No material changes to the risk factors from the company's Annual Report on Form 10-K for the year ended March 30, 2025, have been reported[89](index=89&type=chunk) [Item 6. Exhibits](index=20&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including financing agreements, officer certifications, and interactive data files - The exhibits filed with this report include the Nineteenth Amendment to the Financing Agreement with CIT Group, certifications by the CEO and CFO, and interactive data files[98](index=98&type=chunk)[102](index=102&type=chunk)

Company Overview - Crown Crafts, Inc. designs, markets, and distributes infant, toddler, and juvenile consumer products, and is one of America's largest producers of infant bedding, toddler bedding, diaper bags, bibs, toys, and disposable products [4] - The company operates through its wholly owned subsidiaries, NoJo Baby & Kids, Inc. and Sassy Baby, Inc., marketing products under various trademarks and licensed collections [4] - Sales are made directly to a variety of retailers, including mass merchants, large chain stores, juvenile specialty stores, and internet-based retailers [4] Upcoming Earnings Release - Crown Crafts, Inc. plans to release its first quarter fiscal 2026 operational results before the market opens on August 13, 2025 [1] - A teleconference will be hosted by the President and CEO, Olivia W. Elliott, and the CFO, Claire K. Spencer, at 8:00 a.m. Central Daylight Time on the same day to discuss the results [1] Teleconference Details - Interested individuals can join the teleconference by dialing (844) 861-5504 or by accessing it in listen-only mode via the company's website [2] - A telephone replay of the teleconference will be available one hour after the call until 4:00 p.m. Central Standard Time on November 14, 2025 [3]

Financial Data and Key Metrics Changes - Fiscal year 2025 total sales were slightly below the previous year due to persistent inflation and consumer pullback on discretionary spending [5][12] - Fourth quarter net sales increased by 2.9% year-over-year to $23,200,000, driven by strong sales of Baby Boom products [10] - Full year net sales for fiscal 2025 were $87,300,000, a slight decrease from $87,600,000 in the prior year [12] - GAAP net loss for the fourth quarter was $10,800,000, primarily due to a $13,800,000 goodwill impairment charge [11] - Adjusted net income for the year was $1,000,000, translating to adjusted diluted earnings per share of $0.10 [13] Business Line Data and Key Metrics Changes - The Baby Boom acquisition contributed $11,900,000 in net sales, but this was offset by declines in legacy business lines [12] - Gross profit margin for the fourth quarter decreased to 18.3% from 23.2% in the prior year, attributed to higher tariffs and increased expenses [11] - Marketing and administrative expenses rose by 17% year-over-year, driven by increased advertising costs and expenses from the Baby Boom acquisition [11] Market Data and Key Metrics Changes - The company faced challenges due to uncertainty around U.S. tariff policy, impacting sales from imports [5] - The company is exploring international sales growth through distributor partnerships, anticipating an increase in international sales [33] Company Strategy and Development Direction - The company is focused on long-term growth through acquisitions and expanding product offerings, including the recent acquisition of Baby Boom Consumer Products [6][17] - Plans to mitigate tariff impacts include working with manufacturers and retail partners to absorb costs [19] - The company aims to explore product and channel expansions to increase sales and market share [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the economic headwinds affecting consumers and the company, but emphasized steps taken to position for long-term success [17] - The most pressing challenge is navigating the impact of tariffs, with a 30% tariff on goods ordered [19] - Management expressed optimism about future growth opportunities and the integration of acquisitions [20] Other Important Information - Cash flow from operations for 2025 was $9,800,000, an increase from $7,100,000 in the prior year [14] - The company paid $0.32 per share in cash dividends, marking the fifteenth consecutive year of dividend payments [15] Q&A Session Summary Question: Update on warehouse status - Management is still exploring options for the warehouse but has focused on tariffs recently [24][25] Question: Feedback from the New York Toy Show - The sales and product development team received positive feedback and wrote some orders at the Toy Fair [26] Question: Status of the Stella doll redesign - The new Love Stella line has been well-received, aided by marketing efforts including a mention by Meghan Markle [27] Question: Sales to LEGOLAND - Sales to LEGOLAND increased in fiscal 2025, with expectations to be the only plush supplier in the park soon [29] Question: Development of licensed diaper bags - The company is excited about potential licensed diaper bags but is facing challenges due to tariffs [30] Question: Update on tax credit for baby products - No recent updates on the potential tax credit for parents have been heard [32] Question: Impact of using distributors in Europe - The transition to distributors is expected to positively impact international sales [33] Question: Redesign of the Manhattan Toy website - The website redesign has improved user experience and is driving more traffic through social media [34]

Financial Data and Key Metrics Changes - Fiscal year 2025 total sales were slightly below the previous year due to persistent inflation and consumer pullback on discretionary spending [4] - Fourth quarter net sales increased by 2.9% year-over-year to $23,200,000, driven by strong Baby Boom product sales [8] - Full year net sales for fiscal 2025 were $87,300,000, a slight decrease from $87,600,000 in the prior year [11] - GAAP net loss for the fourth quarter was $10,800,000, primarily due to a $13,800,000 goodwill impairment charge [10] - Adjusted net income for the year was $1,000,000, translating to adjusted diluted earnings per share of $0.10 [12] Business Line Data and Key Metrics Changes - The Baby Boom acquisition contributed $11,900,000 in net sales, but this was offset by declines in legacy business lines [11] - Gross profit margin for the fourth quarter decreased to 18.3% from 23.2% in the prior year, attributed to higher tariffs and increased expenses [9] - Marketing and administrative expenses rose by 17% year-over-year due to increased advertising costs and expenses from the Baby Boom acquisition [10] Market Data and Key Metrics Changes - The company faced challenges due to uncertainty around U.S. tariff policy, impacting sales from imports [4] - The transition to using distributors in Europe is expected to enhance international sales over time [32] Company Strategy and Development Direction - The company is focused on long-term growth through acquisitions and expanding product offerings, including the recent acquisition of Baby Boom Consumer Products [5] - Plans to mitigate tariff impacts include working with manufacturers and retail partners to absorb costs [17] - The company aims to explore product and channel expansions to increase sales and market share [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the economic headwinds affecting consumers and the company, but emphasized steps taken to position for long-term success [16] - The most pressing challenge is navigating the impact of tariffs, with a current expectation of a 30% tariff on goods ordered [17] - Management expressed optimism about future growth opportunities and the integration of acquisitions [16] Other Important Information - Cash flow from operations for 2025 was $9,800,000, an increase from $7,100,000 in the prior year [13] - The company paid $0.32 per share in cash dividends, marking the fifteenth consecutive year of dividend payments [14] Q&A Session Summary Question: Update on warehouse status - The company is still exploring options for the warehouse but has focused on tariffs recently [23] Question: Outcome of the New York Toy Show - The sales and product development team received positive feedback and wrote some orders at the Toy Fair [25] Question: Status of the Stella doll redesign - The new Love Stella line has been well-received, aided by marketing efforts including mentions by Meghan Markle [26] Question: Sales to LEGOLAND - Sales to LEGOLAND increased in fiscal 2025, with expectations to be the only plush supplier in the park soon [29] Question: Development of licensed diaper bags - The company is excited about potential licensed diaper bags but is facing challenges due to tariffs [30] Question: Update on tax credit for baby products - No recent updates on the potential tax credit for parents have been heard [31] Question: Impact of using distributors in Europe - The transition to distributors is expected to positively impact international sales [32] Question: Redesign of the Manhattan Toy website - The redesigned website has improved user experience and is driving more traffic [34]

[Financial Results Announcement](index=1&type=section&id=Financial%20Results%20Announcement) Crown Crafts reported Q4 and full-year fiscal 2025 results, significantly impacted by a goodwill impairment charge [Fourth Quarter Fiscal 2025 Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Highlights) Q4 fiscal 2025 saw net sales of $23.2 million, a 18.3% gross margin, and a GAAP net loss of $10.8 million due to goodwill impairment Q4 Fiscal 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $23.2 million | | Gross Profit | $4.2 million | | Gross Margin | 18.3% | | GAAP Net Loss | $(10.8) million | | GAAP Diluted Loss per Share | $(1.04) | | Adjusted Net Loss | $(429,000) | | Adjusted Diluted Loss per Share | $(0.04) | | Quarterly Dividend | $0.08 per share | - The reported results include a significant goodwill impairment charge of **$13.8 million** (**$10.4 million** after tax), which heavily impacted the GAAP net loss[6](index=6&type=chunk) [Full Year Fiscal 2025 Highlights](index=1&type=section&id=Full%20Year%20Fiscal%202025%20Highlights) Fiscal 2025 net sales were $87.3 million with a 24.4% gross margin, resulting in a GAAP net loss of $9.4 million after impairment Fiscal Year 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $87.3 million | | Gross Profit | $21.3 million | | Gross Margin | 24.4% | | GAAP Net Loss | $(9.4) million | | GAAP Diluted Loss per Share | $(0.90) | | Adjusted Net Income | $1.0 million | | Adjusted Diluted EPS | $0.10 | - Full-year results were adjusted for a goodwill impairment charge of **$13.8 million** (**$10.4 million** after tax), which was the primary driver of the GAAP net loss[6](index=6&type=chunk) [Financial Performance Analysis](index=1&type=section&id=Financial%20Performance%20Analysis) Management discusses Q4 profitability challenges and full-year strategic initiatives, detailing performance drivers and impacts [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO highlights Q4 sales growth offset by margin pressures and outlines key strategic initiatives for long-term growth - Q4 sales increased by **2.9%** year-over-year, but adjusted net income was negatively impacted by close-out sales at lower margins and tariffs[5](index=5&type=chunk) - Key strategic initiatives for the year included: acquiring Baby Boom Consumer Products, integrating Manhattan Toy, reducing operational costs, expanding e-commerce, and planning for warehouse consolidation[5](index=5&type=chunk) [Fourth Quarter Fiscal 2025 Performance Details](index=2&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Performance%20Details) Q4 net sales increased 2.9% to $23.2 million, but gross margin declined to 18.3% due to close-out sales and tariffs - Net sales rose **2.9%** to **$23.2 million**, primarily due to the Baby Boom acquisition[7](index=7&type=chunk) - Gross margin fell by **4.9 percentage points** to **18.3%**, impacted by close-out sales and **$324,000** in higher tariffs from China[7](index=7&type=chunk) - A **$13.8 million** non-cash goodwill impairment charge was recorded after a triggering event related to the company's depressed stock price and market capitalization[9](index=9&type=chunk) - Marketing and administrative expenses increased by **17.0%** to **$4.6 million**, including costs from the Baby Boom business[8](index=8&type=chunk) [Full Year Fiscal 2025 Performance Details](index=2&type=section&id=Full%20Year%20Fiscal%202025%20Performance%20Details) Fiscal 2025 net sales were flat at $87.3 million, with gross margin decreasing to 24.4% and inventory reduced by 6.4% - Net sales were essentially flat at **$87.3 million** compared to fiscal 2024[11](index=11&type=chunk) - Gross margin decreased by **1.8 percentage points** to **24.4%**, primarily due to higher rent, closeout sales, and increased tariffs[11](index=11&type=chunk) - Marketing and administrative expenses rose **16%** to **$18.7 million**, including **$1.2 million** in costs for the Baby Boom acquisition and **$244,000** for a UK subsidiary closure[12](index=12&type=chunk) - Total inventory at year-end was **$27.8 million**, a **6.4%** decrease from the end of fiscal 2024[13](index=13&type=chunk) [Shareholder Information](index=2&type=section&id=Shareholder%20Information) Details on the declared quarterly cash dividend and access information for the upcoming financial results conference call [Quarterly Cash Dividend](index=2&type=section&id=Quarterly%20Cash%20Dividend) The Board declared a **$0.08 per share** quarterly cash dividend payable on July 3, 2025 - The Board of Directors declared a quarterly cash dividend of **$0.08 per share**[14](index=14&type=chunk) - The dividend is payable on July 3, 2025, to stockholders of record at the close of business on June 13, 2025[14](index=14&type=chunk) [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) A conference call is scheduled for 8:00 a.m. CDT to discuss financial results, with a replay available - A conference call to discuss results is scheduled for **8:00 a.m. CDT**[15](index=15&type=chunk) - A telephone replay will be available until **4:00 p.m. CDT on September 25, 2025**[15](index=15&type=chunk) [Company Overview and Disclosures](index=3&type=section&id=Company%20Overview%20and%20Disclosures) Provides background on Crown Crafts, Inc. as a juvenile products producer and outlines forward-looking statement risks [About Crown Crafts, Inc.](index=3&type=section&id=About%20Crown%20Crafts%2C%20Inc.) Crown Crafts, Inc. is a leading American producer and distributor of infant, toddler, and juvenile consumer products - The company designs, markets, and distributes infant, toddler, and juvenile consumer products, including bedding, diaper bags, bibs, and toys[16](index=16&type=chunk) - It operates through wholly-owned subsidiaries like NoJo Baby & Kids, Inc. and Sassy Baby, Inc., and sells directly to major retailers[16](index=16&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to various risks, including economic conditions and supply chain dependencies - The report includes forward-looking statements that are subject to known and unknown risks and uncertainties[17](index=17&type=chunk) - Identified risks include general economic conditions, changing competition, ability to integrate acquisitions, customer concentration, and dependence on foreign suppliers[17](index=17&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Presents the company's consolidated statements of operations, balance sheets, and non-GAAP reconciliations [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Fiscal 2025 saw a net loss of **$9.4 million** due to a **$13.8 million** goodwill impairment charge Consolidated Statements of Operations (in thousands, except per share amounts) | | Fiscal Year Ended March 30, 2025 | Fiscal Year Ended March 31, 2024 | Three-Month Period Ended March 30, 2025 | Three-Month Period Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $87,250 | $87,632 | $23,227 | $22,579 | | **Gross profit** | $21,265 | $23,000 | $4,244 | $5,228 | | **(Loss) income from operations** | $(11,191) | $6,895 | $(14,104) | $1,312 | | **Net (loss) income** | $(9,356) | $4,894 | $(10,787) | $1,004 | | **Diluted (loss) earnings per share** | $(0.90) | $0.48 | $(1.04) | $0.10 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets were **$81.2 million** as of March 30, 2025, with shareholders' equity decreasing to **$39.6 million** Selected Balance Sheet Data (in thousands) | | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total current assets | $55,303 | $54,824 | | Goodwill | $0 | $7,926 | | **Total assets** | **$81,154** | **$82,706** | | Total current liabilities | $15,505 | $10,461 | | Long-term debt | $16,512 | $8,112 | | **Total liabilities** | $41,535 | $31,095 | | **Shareholders' equity** | **$39,619** | **$51,601** | [Non-GAAP Financial Measures Reconciliation](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Reconciles GAAP net loss to adjusted non-GAAP figures by excluding the **$13.8 million** goodwill impairment charge Reconciliation of GAAP to Non-GAAP Net (Loss) Income (in thousands) | | Fiscal Year 2025 | Q4 2025 | | :--- | :--- | :--- | | **Net (loss) income (GAAP)** | **$(9,356)** | **$(10,787)** | | Goodwill impairment charge | 13,766 | 13,766 | | Tax impact of adjustments | (3,408) | (3,408) | | **Adjusted net (loss) income (Non-GAAP)** | **$1,002** | **$(429)** | - Management believes adjusted net income provides useful information by removing the impact of impairment charges that are not reflective of the core business, allowing for better period-to-period comparison[25](index=25&type=chunk)

Part I [Business Overview](index=4&type=section&id=Item%201.%20Business) Crown Crafts, Inc. operates in infant, toddler, and juvenile products, acquiring Baby Boom for **$18.0 million** in FY2025, with key sales from licensed products and major retailers like Walmart and Amazon - Crown Crafts, Inc. operates through subsidiaries NoJo Baby & Kids, Sassy Baby, and Manhattan Toy Europe, selling infant and juvenile products directly to retailers[19](index=19&type=chunk) - On July 19, 2024, NoJo acquired Baby Boom Consumer Products for **$18.0 million** in cash, funded by an **$8.0 million** term loan and revolving credit[21](index=21&type=chunk) International and Trademark Sales (% of gross sales) | Metric | Fiscal Year 2025 | Fiscal Year 2024 | | :---------------------------------------- | :--------------- | :--------------- | | International Sales | 8% | 8% | | Sales under Company-owned trademarks | 39% | 38% | | Sales of licensed products | 50% | - | | Sales under Disney license agreements | 21% | - | - Primary product sourcing is from foreign contract manufacturers, mainly in China, leading to increased costs due to new U.S. tariffs[27](index=27&type=chunk)[29](index=29&type=chunk) Major Customer Gross Sales Contribution (%) | Customer | 2025 | 2024 | | :---------------- | :---- | :---- | | Walmart Inc. | 47% | 42% | | Amazon.com, Inc. | 19% | 19% | - As of May 31, 2025, the company had **168 full-time employees**, none unionized, maintaining good relations through competitive compensation and advancement opportunities[25](index=25&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from customer and licensing concentration, geopolitical tensions, declining birthrates, increased tariffs, and cybersecurity threats, potentially impacting demand and profitability - The top two customers accounted for approximately **66% of gross sales** in fiscal year 2025, indicating significant revenue concentration risk[43](index=43&type=chunk) - Licensed products generated **50% of gross sales** in fiscal year 2025, with **21% from Disney agreements**, creating vulnerability to license non-renewal or declining popularity[44](index=44&type=chunk) - Reliance on Chinese sourcing and new U.S. tariffs increase product costs, potentially impacting financial results if not passed to customers or mitigated by sourcing changes[45](index=45&type=chunk) - Geopolitical tensions, climate change, and a declining U.S. birthrate could reduce product demand, negatively impacting business, cash flow, operations, and financial condition[46](index=46&type=chunk)[47](index=47&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Cybersecurity incidents and evolving AI risks could disrupt IT systems, leading to operational disruptions, substantial remediation costs, and increased protection expenses[64](index=64&type=chunk)[65](index=65&type=chunk) [Unresolved Staff Comments](index=14&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments - The company has no unresolved staff comments[73](index=73&type=chunk) [Cybersecurity](index=14&type=section&id=Item%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity risk management strategy, overseen by the VP of IT and the Board, with no material threats identified as of May 31, 2025 - Cybersecurity measures include a comprehensive risk management strategy covering assessment, policies, training, auditing, threat hunting, and incident response[74](index=74&type=chunk)[75](index=75&type=chunk) - The Vice President of Information Technology, with over **30 years of experience**, leads cybersecurity strategy and reports directly to the CEO[80](index=80&type=chunk) - The Board of Directors oversees cybersecurity risk, receiving periodic reports, and as of May 31, 2025, no material threats have been identified[77](index=77&type=chunk)[78](index=78&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) The company operates from leased administrative, sales, design, warehouse, and distribution facilities across multiple states and China, with all leases expiring by fiscal year 2029 - All company facilities are rented under leases expiring through fiscal year 2029[81](index=81&type=chunk) Company Facilities | Location | Use | Approximate Square Feet | Owned/Leased | | :----------------------------------- | :------------------------------------ | :---------------------- | :----------- | | Gonzales, Louisiana | Administrative and sales office | 15,598 | Leased | | Compton, California | Offices, warehouse and distribution center | 157,400 | Leased | | Minneapolis, Minnesota | Product design and sales office | 16,837 | Leased | | Eden Valley, Minnesota | Warehouse and distribution center | 128,074 | Leased | | Grand Rapids, Michigan | Product design office | 9,100 | Leased | | Newark, New Jersey | Product design office | 2,048 | Leased | | Shanghai, People's Republic of China | Office | 1,912 | Leased | | Shenzhen, People's Republic of China | Office | 4,205 | Leased | [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, none expected to materially affect financial position, operations, or cash flows - The company is involved in various legal proceedings in the ordinary course of business, but none are expected to have a material adverse effect on its financial position, operations, or cash flows[83](index=83&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[84](index=84&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=16&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "CRWS", with **160 record holders** as of May 31, 2025, and historical cash dividends permitted by its credit facility - The company's common stock trades on the Nasdaq Capital Market under symbol "CRWS", with **160 record holders** as of May 31, 2025[86](index=86&type=chunk) - Cash dividends are historically paid, subject to legal provisions, earnings, and credit facility terms, which permit dividends if no default occurs[87](index=87&type=chunk) [Reserved](index=15&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition, operations, and cash flows for FY2025 and FY2024, highlighting a net sales decrease, gross profit decline, net loss due to goodwill impairment, and significant cash outflow for the Baby Boom acquisition [Objective](index=16&type=section&id=Objective) This discussion aims to provide material information for assessing the company's financial condition, operations, and cash flows, highlighting future impact events and uncertainties - The discussion provides material information for assessing financial condition, operations, and cash flows, detailing events and uncertainties impacting future performance[89](index=89&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) FY2025 net sales slightly decreased to **$87.3 million**, gross profit declined by **7.5%** to **$21.3 million**, and a net loss of **$9.4 million** was reported, primarily due to a **$13.8 million** goodwill impairment charge Consolidated Statements of Operations (in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net sales by category: | | | | | | Bedding and diaper bags | $41,083 | $32,036 | $9,047 | 28.2% | | Bibs, toys and disposable products | $46,167 | $55,596 | $(9,429) | -17.0% | | **Total net sales** | **$87,250** | **$87,632** | **$(382)** | **-0.4%** | | Cost of products sold | $65,985 | $64,632 | $1,353 | 2.1% | | **Gross profit** | **$21,265** | **$23,000** | **$(1,735)**| **-7.5%** | | % of net sales | 24.4% | 26.2% | | | | Marketing and administrative expenses| $18,690 | $16,105 | $2,585 | 16.1% | | % of net sales | 21.4% | 18.4% | | | | Interest (expense) income - net | $(1,173) | $(734) | $(439) | 59.8% | | Other (expense) income - net | $(49) | $67 | $(116) | -173.1% | | Income tax (benefit) expense | $(3,057) | $1,334 | $(4,391) | -329.2% | | **Net (loss) income** | **$(9,356)**| **$4,894** | **$(14,250)**| **-291.2%** | | % of net sales | -10.7% | 5.6% | | | - The Baby Boom Acquisition contributed **$11.9 million** in net sales for bedding and diaper bags in fiscal year 2025[92](index=92&type=chunk) - Gross profit decreased due to increased royalty expense, a **$600,000** increase in Compton facility rent, and **$324,000** in higher tariffs on Chinese imports[93](index=93&type=chunk) - Marketing and administrative expenses rose due to **$244,000** from UK subsidiary closure, **$1.2 million** from Baby Boom Acquisition costs, and a **$342,000** increase in advertising[94](index=94&type=chunk) [Known Trends and Uncertainties](index=17&type=section&id=Known%20Trends%20and%20Uncertainties) Financial results are highly dependent on top two customers (**66% of gross sales**), while macroeconomic conditions and tariffs on Chinese imports pose risks to future sales and profitability - Financial results are closely tied to sales to the top two customers, representing approximately **66% of gross sales** in fiscal year 2025[96](index=96&type=chunk) - Macroeconomic conditions and inflation in fiscal year 2025 led consumers to trade down or reduce purchases, potentially impacting future sales and profitability[97](index=97&type=chunk) - U.S. tariffs on Chinese imports increase product costs, and the inability to pass these to customers could materially affect business, cash flow, operations, and financial condition[98](index=98&type=chunk) [Financial Position, Liquidity and Capital Resources](index=17&type=section&id=Financial%20Position%2C%20Liquidity%20and%20Capital%20Resources) Operating cash flow increased to **$9.8 million** in FY2025, while investing activities used **$17.2 million** for the Baby Boom acquisition, and financing provided **$7.0 million** through new debt, with **$13.8 million** available on the revolving credit facility Cash Flow Summary (in thousands) | Cash Flow Activity | FY2025 | FY2024 | Change ($) | | :---------------------------------------- | :---------- | :---------- | :---------- | | Net cash provided by operating activities | $9,821 | $7,084 | $2,737 | | Net cash used in investing activities | $(17,168) | $(193) | $(16,975) | | Net cash provided (used in) by financing activities | $7,039 | $(7,804) | $14,843 | | Net decrease in cash and cash equivalents | $(308) | $(913) | $605 | | Cash and cash equivalents at end of period | $521 | $829 | $(308) | - Operating cash flow increased due to a **$1.2 million** higher decrease in accounts receivable, a **$3.3 million** higher increase in accounts payable, and a **$2.5 million** higher increase in accrued liabilities[100](index=100&type=chunk) - Net cash used in investing activities significantly increased due to the **$16.3 million** payment for the Baby Boom Acquisition[101](index=101&type=chunk) - Financing activities included **$3.8 million** in net borrowings under the revolving line of credit and an **$8.0 million** term loan, primarily for the acquisition[102](index=102&type=chunk) Credit Facility Balances (in thousands) | Metric | March 30, 2025 | March 31, 2024 | | :----------------------------------- | :------------- | :------------- | | Revolving line of credit balance | $11,900 | $8,100 | | Available under revolving line of credit | $13,800 | $19,200 | | Term loan balance | $6,700 | - | - The financing agreement with CIT was amended to waive the fixed charge coverage ratio for FY2025 and FY2026 and increase required Excess Availability[245](index=245&type=chunk) [Critical Accounting Policies and Estimates](index=18&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on significant management estimates for revenue recognition, accounts receivable allowances, inventory valuation, long-lived asset and goodwill impairment, and business combinations, which could materially impact results if actuals differ - Financial statement preparation requires significant management estimates and assumptions, which, if differing from actual results, could materially impact reported amounts[110](index=110&type=chunk) [Revenue Recognition](index=20&type=section&id=Revenue%20Recognition) Revenue is recognized when performance obligations are satisfied and product control transfers, with direct-to-consumer sales recorded upon receipt and retailer sales upon legal title transfer - Revenue is recognized upon satisfaction of contractual performance obligations and transfer of product control to the customer[112](index=112&type=chunk) - Direct-to-consumer sales revenue is recorded upon customer receipt, while retailer sales are recorded when legal title passes, typically upon customer or carrier pickup[113](index=113&type=chunk) [Allowances Against Accounts Receivable](index=20&type=section&id=Allowances%20Against%20Accounts%20Receivable) Allowances for returns, claims, and expected credit losses are estimated based on historical experience and CECL methodology, while other chargebacks are recorded commensurate with sales or on a per-invoice basis - Allowances for anticipated returns and claims are estimated based on historical experience and recorded as a reduction of net sales[115](index=115&type=chunk) - Expected credit losses for non-factored receivables are estimated using the Current Expected Credit Losses methodology, considering various factors, and are included in marketing and administrative expenses[116](index=116&type=chunk) - Other chargeback allowances, such as for cooperative advertising and rebates, are recorded commensurate with sales or on a straight-line, per-invoice basis[117](index=117&type=chunk) [Inventory Valuation](index=20&type=section&id=Inventory%20Valuation) Inventory is valued at the lower of cost or net realizable value using FIFO, with allowances established for obsolescence, deterioration, or price changes, expensed in cost of products sold - Inventory is valued at the lower of cost or net realizable value using the FIFO method, including direct and indirect costs[119](index=119&type=chunk) - Management periodically reviews inventory for obsolescence, deterioration, price changes, and quantities not expected to be sold, establishing allowances expensed in cost of products sold[119](index=119&type=chunk) [Valuation of Long-Lived Assets and Identifiable Intangible Assets](index=21&type=section&id=Valuation%20of%20Long-Lived%20Assets%20and%20Identifiable%20Intangible%20Assets) Long-lived and identifiable intangible assets are reviewed for impairment when carrying amounts may not be recoverable, with losses recognized if carrying amount exceeds fair value [Goodwill](index=21&type=section&id=Goodwill) Goodwill impairment is measured annually and on an interim basis, involving qualitative and quantitative assessments to compare fair value to carrying value, with charges recognized for any difference - Goodwill impairment is measured annually and on an interim basis if triggering events occur, involving qualitative and quantitative assessments of fair value versus carrying value[121](index=121&type=chunk) [Business Combinations](index=21&type=section&id=Business%20Combinations) Acquisitions are accounted for using the acquisition method, recording assets and liabilities at fair value, with goodwill recognized as the excess purchase price, requiring significant judgment in valuation - Acquisitions are accounted for using the acquisition method, measuring acquired assets and assumed liabilities at fair value[122](index=122&type=chunk) - Goodwill is recognized as the excess of purchase price over the fair value of tangible and identifiable intangible assets, less assumed liabilities[122](index=122&type=chunk) - Valuation methods for intangible assets require significant management judgment on projected revenues, costs, growth rates, and discount rates, with potential material impact if actual results differ[122](index=122&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate, commodity price, and significant market concentration risks from top customers and licensed products, exacerbated by tariffs on Chinese imports - As of March 30, 2025, **$18.5 million** in variable-rate debt means a **one percentage point** interest rate increase would decrease annual net income by approximately **$139,000**[124](index=124&type=chunk) - Commodity price risk from cotton, oil, and Chinese labor costs, plus a strengthening Chinese Yuan, could increase finished goods prices, which may not be passed to customers[125](index=125&type=chunk) - Market concentration risk is significant, with **66% of gross sales** from top two customers and **50% from licensed products** (**21% from Disney**), creating vulnerability to customer or license loss[126](index=126&type=chunk) - Tariffs on Chinese imports continue to increase product costs, and the inability to pass these to customers could impact profitability[127](index=127&type=chunk) [Financial Statements and Supplementary Data](index=22&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the company's audited consolidated financial statements and supplementary data, located on pages 23 and F-1 through F-22 of this Annual Report - The audited consolidated financial statements and supplementary data are located on pages **23** and **F-1 through F-22** of this Annual Report[128](index=128&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=22&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in or disagreements with accountants on accounting and financial disclosure[129](index=129&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective as of March 30, 2025, due to a material weakness in ICFR regarding manual journal entry review, though financial statements are fairly presented, and remediation efforts are ongoing - The company's disclosure controls and procedures were not effective as of March 30, 2025, due to a material weakness in internal control over financial reporting[130](index=130&type=chunk) - The material weakness identified is the ineffective design and maintenance of controls for reviewing and approving all manual journal entries[134](index=134&type=chunk) - Despite the material weakness, management believes the consolidated financial statements fairly present the company's financial condition, operations, and cash flows in accordance with GAAP[131](index=131&type=chunk)[135](index=135&type=chunk) - Remediation efforts include improving internal control policies for segregation of duties regarding manual journal entries and enhancing the review process with strengthened documentation and timely supervisory reviews[137](index=137&type=chunk)[141](index=141&type=chunk) [Other Information](index=23&type=section&id=Item%209B.%20Other%20Information) On June 23, 2025, the company amended its CIT financing agreement to modify the Excess Availability covenant and reinstate the fixed charge coverage ratio with a waiver condition - On June 23, 2025, the company amended its financing agreement with CIT to modify the Excess Availability covenant and reinstate the fixed charge coverage ratio, with a waiver condition[138](index=138&type=chunk) - No directors or officers reported adopting, modifying, or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended March 30, 2025[139](index=139&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=23&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the company[140](index=140&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=24&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the **2025 Proxy Statement**[143](index=143&type=chunk) [Executive Compensation](index=24&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2025 Proxy Statement - Information on executive compensation is incorporated by reference from the **2025 Proxy Statement**[143](index=143&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=24&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and related stockholder matters are incorporated by reference from the Proxy Statement, with **763,000 stock options** outstanding and **179,000 shares** available under the 2021 Incentive Plan as of March 30, 2025 - Information on security ownership and related stockholder matters is incorporated by reference from the Proxy Statement[144](index=144&type=chunk) Equity Compensation Plan Information | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | | :-------------------------------------- | :------------------------------------------------------------------------ | :------------------------------------------------------------------------ | :----------------------------------------------------------------------------------------- | | 2014 Omnibus Equity Compensation Plan | 508,000 | $7.16 | 0 | | 2021 Incentive Plan | 280,000 | $5.66 | 178,851 | [Certain Relationships and Related Transactions, and Director Independence](index=25&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[148](index=148&type=chunk) [Principal Accountant Fees and Services](index=25&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the Proxy Statement[148](index=148&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=26&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements, a schedule for Valuation and Qualifying Accounts, and SEC Regulation S-K exhibits, cautioning investors that exhibit representations are for party benefit - The section includes the company's consolidated financial statements and a schedule for Valuation and Qualifying Accounts[151](index=151&type=chunk)[152](index=152&type=chunk) - Exhibits required by SEC Regulation S-K are listed, including agreements, corporate documents, equity compensation plans, and certifications[156](index=156&type=chunk)[159](index=159&type=chunk) - Investors are reminded that representations and warranties in exhibits are for the benefit of the parties and may not describe the actual state of affairs[157](index=157&type=chunk)[158](index=158&type=chunk) Accounts Receivable Valuation Accounts (in thousands) | Column A | Column B (Balance at Beginning of Period) | Column C (Charged to Expenses) | Column D (Deductions) | Column E (Balance at End of Period) | | :----------------------------- | :---------------------------------------- | :----------------------------- | :-------------------- | :---------------------------------- | | **Year Ended March 31, 2024** | | | | | | Allowance for customer deductions | $1,474 | $6,139 | $6,443 | $1,170 | | Allowance for expected credit losses | $0 | $316 | $0 | $316 | | **Year Ended March 30, 2025** | | | | | | Allowance for customer deductions | $1,170 | $7,480 | $7,201 | $1,449 | | Allowance for expected credit losses | $316 | $0 | $42 | $274 | [Form 10-K Summary](index=31&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Form 10-K Summary is not applicable[165](index=165&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=32&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) [Audited Financial Statements](index=32&type=section&id=Audited%20Financial%20Statements) This section lists the audited consolidated financial statements, including the Independent Auditor's Report, Balance Sheets, Statements of Operations, Shareholders' Equity, Cash Flows, and Notes - The audited financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Equity, Statements of Cash Flows, and Notes[168](index=168&type=chunk) [Report of Independent Registered Public Accounting Firm](index=33&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on Crown Crafts, Inc.'s consolidated financial statements for FY2025 and FY2024, with critical audit matters including fair value of licensing relationships and assessment of various allowances - KPMG LLP issued an unqualified opinion on the consolidated financial statements, affirming fair presentation in conformity with U.S. GAAP for FY2025 and FY2024[170](index=170&type=chunk) - Critical audit matters included evaluating the fair value of licensing relationships intangible assets from the Baby Boom acquisition and assessing allowances for returns, claims, and credit losses, both requiring subjective judgment[174](index=174&type=chunk)[175](index=175&type=chunk)[178](index=178&type=chunk) [Consolidated Balance Sheets](index=35&type=section&id=Consolidated%20Balance%20Sheets) As of March 30, 2025, total assets decreased to **$81.2 million**, goodwill was fully impaired, total liabilities increased to **$41.5 million**, and shareholders' equity significantly decreased to **$39.6 million** due to net loss and dividends Consolidated Balance Sheets (amounts in thousands) | ASSETS | March 30, 2025 | March 31, 2024 | | :----------------------------------------- | :------------- | :------------- | | Cash and cash equivalents | $521 | $829 | | Accounts receivable (net) | $24,508 | $22,403 | | Inventories | $27,800 | $29,709 | | Total current assets | $55,303 | $54,824 | | Operating lease right of use assets | $12,253 | $14,949 | | Property, plant and equipment - net | $1,888 | $1,656 | | Finite-lived intangible assets - net | $7,050 | $2,872 | | Goodwill | $- | $7,926 | | Deferred income taxes | $4,508 | $277 | | **Total Assets** | **$81,154** | **$82,706** | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Accounts payable | $5,225 | $4,502 | | Accrued royalties | $1,507 | $290 | | Current maturities of long-term debt | $1,990 | $- | | Total current liabilities | $15,505 | $10,461 | | Long-term debt | $16,512 | $8,112 | | Operating lease liabilities, noncurrent | $9,107 | $12,138 | | **Total non-current liabilities** | **$26,030** | **$20,644** | | Common stock | $135 | $132 | | Additional paid-in capital | $58,637 | $57,888 | | Treasury stock | $(15,880) | $(15,821) | | Retained Earnings (accumulated deficit) | $(3,273) | $9,402 | | **Total shareholders' equity** | **$39,619** | **$51,601** | | **Total Liabilities and Shareholders' Equity** | **$81,154** | **$82,706** | [Consolidated Statements of Operations](index=37&type=section&id=Consolidated%20Statements%20of%20Operations) FY2025 saw a net loss of **$9.4 million** (down from **$4.9 million** net income in FY2024), with flat net sales, a **7.5%** gross profit decrease, and a **$13.8 million** goodwill impairment charge leading to an operating loss Consolidated Statements of Operations (amounts in thousands, except per share amounts) | Metric | 2025 | 2024 | | :----------------------------------- | :---------- | :---------- | | Net sales | $87,250 | $87,632 | | Cost of products sold | $65,985 | $64,632 | | **Gross profit** | **$21,265** | **$23,000** | | Marketing and administrative expenses| $18,690 | $16,105 | | Goodwill impairment charge | $13,766 | $- | | **(Loss) income from operations** | **$(11,191)**| **$6,895** | | Interest expense - net | $(1,173) | $(734) | | Other (expense) income - net | $(49) | $67 | | **(Loss) income before income tax expense**| **$(12,413)**| **$6,228** | | Income tax (benefit) expense | $(3,057) | $1,334 | | **Net (loss) income** | **$(9,356)**| **$4,894** | | Basic (loss) earnings per share | $(0.90) | $0.48 | | Diluted (loss) earnings per share | $(0.90) | $0.48 | [Consolidated Statements of Changes in Shareholders' Equity](index=38&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity decreased from **$51.6 million** to **$39.6 million** due to a **$9.4 million** net loss and **$3.3 million** in dividends declared in FY2025, despite **$752,000** from stock-based compensation Consolidated Statements of Changes in Shareholders' Equity (Dollar amounts in thousands) | Metric | Balances - March 31, 2024 | Issuance of shares | Stock-based compensation | Acquisition of treasury stock | Net loss | Dividends declared on common stock | Balances - March 30, 2025 | | :----------------------------------- | :------------------------ | :----------------- | :----------------------- | :---------------------------- | :---------- | :--------------------------------- | :------------------------ | | Common Shares (Number) | 13,208,226 | 270,176 | - | - | - | - | 13,478,402 | | Common Shares (Amount) | $132 | $3 | - | - | - | - | $135 | | Treasury Shares (Number) | (2,897,507) | - | - | (13,352) | - | - | (2,910,859) | | Treasury Shares (Amount) | $(15,821) | - | - | $(59) | - | - | $(15,880) | | Additional Paid-in Capital | $57,888 | $(3) | $752 | - | - | - | $58,637 | | Retained Earnings (Accumulated Deficit)| $9,402 | - | - | - | $(9,356) | $(3,319) | $(3,273) | | **Total Shareholders' Equity** | **$51,601** | **-** | **$752** | **$(59)** | **$(9,356)**| **$(3,319)** | **$39,619** | [Consolidated Statements of Cash Flows](index=39&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$9.8 million** in FY2025, investing activities used **$17.2 million** for the Baby Boom acquisition, and financing provided **$7.0 million** through new debt, resulting in a **$308,000** decrease in cash Consolidated Statements of Cash Flows (amounts in thousands) | Cash Flow Activity | 2025 | 2024 | | :---------------------------------------- | :---------- | :---------- | | Net cash provided by operating activities | $9,821 | $7,084 | | Net cash used in investing activities | $(17,168) | $(193) | | Net cash provided (used in) by financing activities | $7,039 | $(7,804) | | Net decrease in cash and cash equivalents | $(308) | $(913) | | Cash and cash equivalents at beginning of period | $829 | $1,742 | | Cash and cash equivalents at end of period | $521 | $829 | | Supplemental cash flow information: | | | | Income taxes paid | $633 | $2,747 | | Interest paid | $1,046 | $818 | - Adjustments reconciling net loss to operating cash flow in FY2025 included a **$13.8 million** goodwill impairment charge and a **$4.6 million** reduction in right-of-use assets[191](index=191&type=chunk) - The significant increase in cash used in investing activities was primarily due to the **$16.3 million** payment for the Baby Boom acquisition[191](index=191&type=chunk) - Financing activities in FY2025 included **$85.8 million** in borrowings and **$82.1 million** in repayments under the revolving line of credit, and **$7.96 million** in proceeds from a term loan[191](index=191&type=chunk) [Notes to Consolidated Financial Statements](index=40&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's business, significant accounting policies (revenue, allowances, inventory, assets, goodwill, business combinations), the Baby Boom acquisition, financing, retirement plan, stock-based compensation, income taxes, shareholders' equity, and major concentrations [Note 1 – Description of Business](index=40&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business) Crown Crafts, Inc. operates in the infant, toddler, and juvenile products segment through its subsidiaries, selling bedding, diaper bags, bibs, toys, and feeding products under various labels, with its fiscal year ending near March 31 - Crown Crafts, Inc. operates in the infant, toddler, and juvenile products segment through its wholly-owned subsidiaries: NoJo Baby & Kids, Sassy Baby, and Manhattan Toy Europe Limited[193](index=193&type=chunk) - Products are marketed under company-owned, licensed, and private labels, primarily sold directly to retailers[193](index=193&type=chunk) - The fiscal year ends on the Sunday nearest to March 31; FY2025 ended March 30, 2025, and FY2024 ended March 31, 2024[194](index=194&type=chunk) [Note 2 - Summary of Significant Accounting Policies](index=40&type=section&id=Note%202%20-%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines significant accounting policies, including GAAP basis, management estimates, single operating segment, revenue recognition, allowances, inventory valuation, asset capitalization, goodwill impairment, and recently issued accounting standards - Consolidated financial statements are prepared in conformity with U.S. GAAP, requiring significant management estimates and assumptions[195](index=195&type=chunk)[196](index=196&type=chunk) - The company operates primarily in one principal segment: infant, toddler, and juvenile products, with net sales categorized into bedding/diaper bags and bibs/toys/disposable products[199](index=199&type=chunk) Net Sales by Product Category (in thousands) | Category | 2025 | 2024 | | :------------------------------- | :---------- | :---------- | | Bedding and diaper bags | $41,083 | $32,036 | | Bibs, toys and disposable products | $46,167 | $55,596 | | **Total net sales** | **$87,250** | **$87,632** | - Revenue is recognized upon satisfaction of performance obligations and transfer of control, with allowances for returns, credit losses, and chargebacks estimated based on historical experience and economic conditions[201](index=201&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk) - Inventory is valued at the lower of cost or net realizable value using the FIFO method, with allowances established for obsolescence or market value declines[209](index=209&type=chunk)[211](index=211&type=chunk) - Goodwill impairment is measured annually and on an interim basis, involving qualitative and quantitative assessments to determine if fair value is below carrying value[217](index=217&type=chunk) - The company adopted ASU No. 2023-07 (Segment Reporting) effective April 1, 2024, and is evaluating ASU No. 2023-09 (Income Taxes) and ASU No. 2024-03 (Income Statement Expenses) for future adoption[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) [Note 3 – Segment Reporting](index=45&type=section&id=Note%203%20%E2%80%93%20Segment%20Reporting) The company operates as a single segment for infant, toddler, and juvenile products, reporting a **$9.4 million** net loss in FY2025, including **$704,000** depreciation and **$14.5 million** amortization (with a **$13.8 million** goodwill impairment charge) - The company operates primarily in one principal segment: infant, toddler, and juvenile products, with the CEO managing and evaluating results on a consolidated basis[231](index=231&type=chunk) Reportable Segment Information (in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :---------- | :---------- | | Net sales | $87,250 | $87,632 | | Cost of products sold | $65,985 | $64,632 | | Marketing and administrative expenses| $18,690 | $16,105 | | Goodwill impairment charge | $13,766 | $- | | Interest expense, net and other | $1,222 | $667 | | Income tax expense (benefit) | $(3,057) | $1,334 | | **Segment net income** | **$(9,356)**| **$4,894** | | Depreciation expense | $704 | $835 | | Amortization expense (incl. goodwill impairment) | $14,500 | $601 | [Note 4 – Inventories](index=45&type=section&id=Note%204%20%E2%80%93%20Inventories) As of March 30, 2025, inventory decreased to **$27.8 million** from **$29.7 million** at March 31, 2024, with nearly all consisting of finished goods Inventory Balances (in millions) | Metric | March 30, 2025 | March 31, 2024 | | :-------- | :------------- | :------------- | | Inventories | $27.8 | $29.7 | - Nearly all of the company's inventory consisted of finished goods[233](index=233&type=chunk) [Note 5 – Acquisition](index=45&type=section&id=Note%205%20%E2%80%93%20Acquisition) On July 19, 2024, NoJo acquired Baby Boom for **$16.3 million** cash, funded by an **$8.0 million** term loan, recognizing **$5.8 million** goodwill, and generating **$11.9 million** in net sales from acquired assets by March 30, 2025 - On July 19, 2024, NoJo acquired Baby Boom Consumer Products for a net acquisition cost of **$16.3 million** in cash, funded by an **$8.0 million** term loan and revolving credit[234](index=234&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) Allocation of Acquisition Cost (in thousands) | Acquired Assets and Liabilities | Amount | | :------------------------------ | :----- | | Tangible assets | $6,107 | | Amortizable intangible assets | $4,950 | | Goodwill | $5,840 | | Liabilities assumed | $(601) | | **Net acquisition cost** | **$16,296** | - Goodwill of **$5.8 million** was recognized and assigned to the infant and toddler bedding and diaper bags reporting unit, expected to be income tax deductible[237](index=237&type=chunk) - Acquired assets generated **$11.9 million** in net sales of bedding and diaper bag products from the closing date to March 30, 2025[237](index=237&type=chunk) Pro Forma Combined Financials (unaudited, in millions) | Metric | FY2025 (Pro Forma) | FY2024 (Pro Forma) | | :--------------- | :----------------- | :----------------- | | Net sales | $92.3 | $109.9 | | Net (loss) income| $(8.6) | $4.9 | [Note 6 – Financing Arrangements](index=47&type=section&id=Note%206%20%E2%80%93%20Financing%20Arrangements) The company uses factoring agreements with CIT and a credit facility including a **$40 million** revolving line and an **$8.0 million** term loan, with **$11.9 million** outstanding on the revolver and **$6.7 million** on the term loan as of March 30, 2025 - The company assigns most trade accounts receivable to CIT under factoring agreements, with factoring fees of **$386,000** in FY2025 and **$353,000** in FY2024[239](index=239&type=chunk)[240](index=240&type=chunk) - The credit facility includes a **$40 million** revolving line of credit (maturing July 19, 2029) and an **$8.0 million** term loan (issued July 19, 2024)[241](index=241&type=chunk)[243](index=243&type=chunk) Credit Facility Balances (in millions) | Metric | March 30, 2025 | March 31, 2024 | | :----------------------------------- | :------------- | :------------- | | Revolving line of credit balance | $11.9 | $8.1 | | Available under revolving line of credit | $13.8 | $19.2 | | Term loan balance | $6.7 | - | - The financing agreement was amended in January and February 2025 to waive the fixed charge coverage ratio for FY2025 and FY2026 and increase the required Excess Availability[244](index=244&type=chunk)[245](index=245&type=chunk) Fair Value of Debt (in thousands) as of March 30, 2025 | Debt Type | Fair Value | Fair Value Measurement Using Significant Other Observable Inputs (Level 2) | | :--------------------- | :--------- | :----------------------------------------------------------------------- | | Term loan | $6,652 | $6,652 | | Revolving line of credit | $11,627 | $11,627 | | **Total debt** | **$18,279**| **$18,279** | Aggregate Maturities of Long-Term Debt (in millions) | Fiscal Year | Amount | | :---------- | :----- | | 2026 | $2.0 | | 2027 | $2.0 | | 2028 | $2.2 | | 2029 | $0.5 | | 2030 | $11.9 | [Note 7 – Retirement Plan](index=48&type=section&id=Note%207%20%E2%80%93%20Retirement%20Plan) The company sponsors a 401(k) Plan for most employees, with matching contributions of **$359,000** in FY2025 and **$320,000** in FY2024, based on a 100% match for the first 2% and 50% for the next 3% of employee contributions - The company sponsors a 401(k) Plan for substantially all employees[250](index=250&type=chunk) - Employer matching contributions for 2023-2025 were **100% of the first 2%** and **50% of the next 3%** of employee contributions[251](index=251&type=chunk) 401(k) Matching Contributions (in thousands) | Fiscal Year | Matching Contributions (net of forfeitures) | | :---------- | :---------------------------------------- | | 2025 | $359 | | 2024 | $320 | [Note 8 – Goodwill, Customer Relationships and Other Intangible Assets](index=48&type=section&id=Note%208%20%E2%80%93%20Goodwill%2C%20Customer%20Relationships%20and%20Other%20Intangible%20Assets) Goodwill impairment is measured annually and on an interim basis; a **$13.8 million** non-cash impairment charge was recorded in FY2025, reducing net goodwill to **$0**, while other intangible assets totaled **$17.9 million** gross with **$772,000** amortization expense - Goodwill impairment is measured annually and on an interim basis, using income and market approaches for fair value determination[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - A non-cash goodwill impairment charge of **$13.8 million** was recorded in FY2025, reducing net goodwill to **$0** at March 30, 2025, due to fair values being lower than carrying values[257](index=257&type=chunk) Goodwill Carrying Amounts (in thousands) | Metric | As of April 3, 2023 | March 31, 2024 | March 30, 2025 | | :----------------------------------- | :------------------ | :------------- | :------------- | | Gross goodwill | $30,838 | $30,838 | $36,678 | | Accumulated impairment losses | $(22,912) | $(22,912) | $(36,678) | | **Net goodwill** | **$7,926** | **$7,926** | **$-** | | Additions | - | $5,840 | - | | Impairment charge | - | $(13,766) | - | Other Intangible Assets (in thousands) | Intangible Asset | Gross Amount (March 30, 2025) | Gross Amount (March 31, 2024) | Accumulated Amortization (March 30, 2025) | Accumulated Amortization (March 31, 2024) | Amortization Expense (2025) | Amortization Expense (2024) | | :--------------------- | :---------------------------- | :---------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------------- | :-------------------------- | | Tradename and trademarks | $3,217 | $2,867 | $2,316 | $2,185 | $131 | $160 | | Non-compete covenants | $98 | $98 | $98 | $98 | $- | $- | | Patents | $1,601 | $1,601 | $1,160 | $1,107 | $53 | $52 | | Customer relationships | $8,174 | $8,174 | $7,007 | $6,658 | $349 | $369 | | Licensing relationships| $4,800 | $200 | $259 | $20 | $239 | $20 | | **Total other intangible assets** | **$17,890** | **$12,940** | **$10,840** | **$10,068** | **$772** | **$601** | Estimated Amortization Expense for Other Intangible Assets (in thousands) | Fiscal Year | Estimated Amortization Expense | | :---------- | :----------------------------- | | 2026 | $774 | | 2027 | $747 | | 2028 | $701 | | 2029 | $563 | | 2030 | $563 | [Note 9 – Leases](index=50&type=section&id=Note%209%20%E2%80%93%20Leases) The company capitalizes most operating leases as right-of-use assets, with **$4.5 million** in cash payments in FY2025, a **6.0%** weighted-average discount rate, and total undiscounted payments of **$14.5 million** - The company capitalizes most operating lease obligations as right-of-use assets and recognizes corresponding lease liabilities, excluding short-term agreements[258](index=258&type=chunk) Operating Lease Metrics | Metric | FY2025 | FY2024 | | :----------------------------------- | :---------- | :---------- | | Cash payments related to operating leases (in millions) | $4.5 | $3.6 | | Weighted-average discount rates | 6.0% | 6.0% | | Weighted-average remaining lease terms (years) | 3.2 | 3.9 | Operating Lease Costs (in thousands) | Cost Classification | 2025 | 2024 | | :--------------------------------- | :---------- | :---------- | | Cost of products sold | $4,202 | $3,956 | | Marketing and administrative expenses| $386 | $388 | | **Total operating lease costs** | **$4,588** | **$4,344** | Maturities of Operating Lease Liabilities as of March 30, 2025 (in thousands) | Fiscal Year | Total Undiscounted Operating Lease Payments | | :---------- | :---------------------------------------- | | 2026 | $4,703 | | 2027 | $4,384 | | 2028 | $4,135 | | 2029 | $850 | | 2030 | $192 | | 2031 | $148 | | 2032 | $48 | | **Total undiscounted operating lease payments** | **$14,460** | [Note 10 – Stock-based Compensation](index=51&type=section&id=Note%2010%20%E2%80%93%20Stock-based%20Compensation) The company has three incentive stock plans, with **$752,000** in stock-based compensation expense in FY2025, **763,000 stock options** outstanding, and **$1.1 million** in unrecognized compensation expense for non-vested stock as of March 30, 2025 - The company has three incentive stock plans (2006, 2014, and 2021 Plans), with new grants exclusively under the **2021 Plan**[260](index=260&type=chunk)[261](index=261&type=chunk) Stock-based Compensation Expense (in thousands) | Fiscal Year | Stock-based Compensation | | :---------- | :----------------------- | | 2025 | $752 | | 2024 | $763 | Stock Option Activity | Metric | 2025 (Number of Options Outstanding) | 2025 (Weighted-Average Exercise Price) | 2024 (Number of Options Outstanding) | 2024 (Weighted-Average Exercise Price) | | :--------------------------- | :----------------------------------- | :------------------------------------- | :----------------------------------- | :------------------------------------- | | Outstanding at Beginning of Period | 895,500 | $6.93 | 735,500 | $7.32 | | Granted | 30,000 | $5.03 | 170,000 | $5.20 | | Expired | (52,500) | $7.90 | (10,000) | $6.14 | | Forfeited | (110,000) | $- | - | $- | | **Outstanding at End of Period** | **763,000** | **$6.84** | **895,500** | **$6.93** | | Exercisable at End of Period | 658,000 | $7.11 | 665,500 | $7.41 | - As of March 30, 2025, total unrecognized stock-option compensation costs amounted to **$19,000**, to be recognized over a weighted-average period of **6.4 months**[266](index=266&type=chunk) Non-vested Stock Granted to Directors | Number of Shares | Fair Value per Share | Grant Date | Vesting Period (Years) | | :--------------- | :------------------- | :------------- | :--------------------- | | 81,176 | $4.68 | August 15, 2024| One | | 60,412 | $4.85 | August 15, 2023| One | Non-vested Stock Granted to Employees | Number of Shares | Fair Value per Share | Grant Date | Vesting Date | | :--------------- | :------------------- | :------------- | :------------- | | 179,000 | $3.82 | March 26, 2025 | March 26, 2028 | | 70,000 | $5.27 | March 26, 2024 | March 26, 2027 | | 26,000 | $4.77 | August 14, 2023| August 14, 2024| | 40,000 | $5.85 | March 21, 2023 | March 21, 2025 | - Performance awards of **187,500 shares** were granted to executive officers on March 1, 2022, contingent on stock price hurdles (**$8.00** and **$9.00**) by March 1, 2027, with vesting over two years after earning[269](index=269&type=chunk) - Total unrecognized compensation expense for non-vested stock grants was **$1.1 million** as of March 30, 2025, with a weighted-average vesting term of **16.3 months**[270](index=270&type=chunk) [Note 11 – Income Taxes](index=55&type=section&id=Note%2011%20%E2%80%93%20Income%20Taxes) The FY2025 income tax provision was a **$3.1 million** benefit (vs. **$1.3 million** expense in FY2024), with net deferred income tax assets increasing to **$4.5 million**, and an effective tax rate of **24.6%** Income Tax Provision (in thousands) | Income Tax Component | FY2025 | FY2024 | | :----------------------------------- | :---------- | :---------- | | Total income tax expense (benefit) on current year income | $(3,121) | $1,333 | | Income tax expense - discrete items | $64 | $1 | | **Total income tax expense (benefit)** | **$(3,057)**| **$1,334** | Deferred Income Tax Assets and Liabilities (in thousands) | Deferred Tax Item | March 30, 2025 | March 31, 2024 | | :------------------------------------- | :------------- | :------------- | | Total gross deferred income tax assets | $8,905 | $6,059 | | Less valuation allowance | $(704) | $(704) | | Deferred income tax assets after valuation allowance | $8,201 | $5,355 | | Total deferred income tax liabilities | $(3,693) | $(5,078) | | **Net deferred income tax assets** | **$4,508** | **$277** | - The valuation allowance relates to state net operating loss carryforwards not expected to be realized[273](index=273&type=chunk) Reconciliation of Unrecognized Tax Liabilities (in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :---------- | :---------- | | Balance at beginning of period | $394 | $323 | | Additions related to current year positions | $22 | $43 | | Additions related to prior year positions | $81 | $28 | | Reductions due to lapses of the statute of limitations | $(86) | $- | | **Balance at end of period** | **$411** | **$394** | Effective Tax Rates | Fiscal Year | Effective Tax Rate | | :---------- | :----------------- | | 2025 | 24.6% | | 2024 | 21.4% | [Note 12 – Shareholders' Equity](index=57&type=section&id=Note%2012%20%E2%80%93%20Shareholders%27%20Equity) Cash dividends of **$0.32 per share** (totaling **$3.3 million** annually) were declared in FY2025 and FY2024, and **13,000 treasury shares** were acquired in FY2025 through employee stock surrenders - Cash dividends of **$0.32 per share** were declared in both FY2025 and FY2024, amounting to approximately **$3.3 million** annually[277](index=277&type=chunk) - The company acquired **13,000 treasury shares** in FY2025 at a weighted-average market value of **$4.44 per share** through employee stock surrenders for stock option exercise and tax withholding[278](index=278&type=chunk) [Note 13 – Major Customers and Concentrations](index=57&type=section&id=Note%2013%20%E2%80%93%20Major%20Customers%20and%20Concentrations) The company primarily sources from China, facing tariff-induced cost increases, and has high customer concentration with Walmart (**47%**) and Amazon (**19%**) of gross sales, alongside **50%** of gross sales from licensed products - The company primarily sources products from foreign contract manufacturers, with the largest concentration in China, facing increased costs due to U.S. tariffs[279](index=279&type=chunk)[281](index=281&type=chunk) - Sales of licensed products represented **50% of gross sales** in fiscal year 2025, including **21% from Disney license agreements**, which are expected to be renewed[283](index=283&type=chunk) Major Customer Gross Sales Contribution (%) | Customer | 2025 | 2024 | | :---------------- | :---- | :---- | | Walmart Inc. | 47% | 42% | | Amazon.com, Inc. | 19% | 19% | [Note 14 – Commitments and Contingencies](index=59&type=section&id=Note%2014%20%E2%80%93%20Commitments%20and%20Contingencies) Royalty expense was **$6.7 million** in FY2025, with minimum guaranteed royalty payments totaling **$2.4 million** over the next five years, and no material adverse effects expected from legal proceedings Royalty Expense (in millions) | Fiscal Year | Royalty Expense | | :---------- | :-------------- | | 2025 | $6.7 | | 2024 | $5.3 | Minimum Guaranteed Royalty Payments (in millions) | Fiscal Year | Commitment | | :---------- | :--------- | | 2026 | $1.4 | | 2027 | $0.64 | | 2028 | $0.19 | | 2029 | $0.146 | | 2030 | $0.056 | | **Total** | **$2.4** | - The company is involved in various legal proceedings, but none are expected to have a material adverse effect on its financial position, operations, or cash flows[287](index=287&type=chunk) [Note 15 – Subsequent Events](index=59&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) On June 23, 2025, the company and CIT amended their financing agreement, modifying the Excess Availability covenant and reinstating the fixed charge coverage ratio with a waiver condition, with the company in compliance as of March 30, 2025 - On June 23, 2025, the company and CIT amended their financing agreement to modify the Excess Availability covenant and reinstate the fixed charge coverage ratio, with a waiver condition[288](index=288&type=chunk) - As of March 30, 2025, the company had complied with the Excess Availability requirements[288](index=288&type=chunk)