Sales Performance - Sales to international customers represented 3% of total gross sales in fiscal year 2021, down from 6% in fiscal year 2020[24] - Sales of products marketed under the Company's trademarks accounted for 38% of total gross sales in fiscal year 2021, compared to 36% in fiscal year 2020[38] - Licensed products represented 41% of gross sales in fiscal year 2021, including 34% from agreements with The Walt Disney Company[39] - Walmart Inc. accounted for 43% of gross sales in fiscal year 2021, while Amazon.com, Inc. represented 25%[41] - Total net sales for 2021 were $79.2 million, an increase of $5.8 million or 7.9% compared to 2020, driven by higher sell-through at major retailers[106] - Sales of bedding, blankets, and accessories increased by $9.0 million, while sales of bibs, bath, developmental toys, feeding, baby care, and disposable products decreased by $3.2 million[106] - Approximately 68% of the Company's gross sales in fiscal year 2021 were attributed to its top two customers, indicating a significant reliance on these clients[118] - Total net sales increased to $79,164,000 in fiscal year 2021, up 7.6% from $73,396,000 in fiscal year 2020[213] - Sales of bedding, blankets, and accessories rose to $47,036,000, a significant increase of 23.5% from $38,065,000 in the previous year[213] - Sales of bibs, bath, and disposable products decreased to $32,128,000, down 9.9% from $35,331,000 in fiscal year 2020[213] Financial Position - Gross profit for 2021 was $24.1 million, representing 30.4% of net sales, up from 29.4% in 2020, primarily due to a favorable customer and product mix[107] - The effective tax rate for the Company was 24.0% for both fiscal years ended March 28, 2021, and March 29, 2020[110] - The effective tax rate (ETR) on continuing operations was 21.3% for fiscal year 2021, compared to 15.5% for fiscal year 2020[117] - Total current assets increased to $41,470 thousand as of March 28, 2021, compared to $37,041 thousand as of March 29, 2020, marking an increase of 11.6%[193] - Total liabilities increased to $16,217 thousand as of March 28, 2021, compared to $14,737 thousand as of March 29, 2020, reflecting a rise of 10.1%[194] - Total shareholders' equity decreased to $41,865 thousand from $42,436 thousand year-over-year, indicating a decline of 1.3%[194] - Net income for fiscal year 2021 was $6,081,000, a decrease of 7.3% from $6,561,000 in fiscal year 2020[201] - The company incurred a loss from impairment of long-lived assets amounting to $2,234,000 in fiscal year 2021[201] - Basic earnings per share decreased to $0.60 from $0.65 year-over-year, reflecting a 7.7% decline[197] Operational Challenges - The Company closed Carousel Designs due to high costs and declining sales, ceasing operations on May 21, 2021[20] - The decline in the birthrate in the United States has been steady, which could lead to reduced demand for the Company's products and increased order cancellations[58] - The Company faces competitive pressures from larger competitors with greater financial resources, which could negatively impact its sales and revenues[56] - Economic conditions, including rising freight costs and raw material prices, could adversely affect the Company's profitability if these costs cannot be passed on to customers[64] - The COVID-19 pandemic has disrupted the Company's supply chain, leading to increased freight costs and shipping delays[121] - The Company's operations are highly dependent on its distribution network, primarily importing products from China, which poses risks of disruptions that could impact sales[74] - The Company relies on foreign contract manufacturers, primarily in China, which exposes it to risks related to international trade regulations and potential disruptions[66] Compliance and Governance - The Company is subject to income tax examinations that could result in adjustments to its effective tax rate, potentially affecting its operating results[76] - The Company must comply with strict product safety regulations, and any recalls or product liability claims could adversely affect its reputation and operating results[62] - The Company is subject to evolving government regulations regarding e-commerce, which could impact its operations and financial results[84] - The company has no significant disagreements with accountants on accounting and financial disclosure[145] - The independent auditor's report confirms the integrity of the financial statements, enhancing stakeholder confidence[184] - The company has a structured approach to financial reporting, ensuring compliance with the Securities Exchange Act of 1934[177] Cash Flow and Financing - Net cash provided by operating activities increased from $8.5 million in fiscal year 2020 to $8.7 million in fiscal year 2021[124] - Net cash used in investing activities rose to $733,000 in fiscal year 2021 from $678,000 in fiscal year 2020[125] - The Company had no balance owed on its revolving line of credit as of March 28, 2021, with $26.0 million available based on eligible accounts receivable and inventory[130] - The company repaid $22,290,000 under its revolving line of credit, compared to $50,955,000 in the previous year[201] - The financing agreement with CIT was amended to extend the maturity date to July 11, 2025, and adjust interest rates to prime minus 1.0% or LIBOR plus 1.5%[129] Employee and Management - The Company had 131 employees as of May 31, 2021, with no union representation[31] - The management has implemented various employment agreements and compensation plans to align with corporate governance and operational needs[10.19] - The company established an allowance for inventory valuation, which may impact financial results if actual results differ from management's estimates[142] - The allowance for customer deductions increased from $530,000 in the previous year to $723,000 for the year ended March 28, 2021[168] - As of March 28, 2021, the company concluded that its internal control over financial reporting was effective[148] - The company’s management conducted an evaluation of its disclosure controls and procedures, concluding they are effective as of the end of the reporting period[147]
Crown Crafts(CRWS) - 2021 Q4 - Annual Report