Core Viewpoint - Crown Crafts, Inc. reported a decline in net sales and profitability for the third quarter of fiscal 2025, primarily due to lower online toy sales and the loss of a major retailer's bid program, despite a positive contribution from the Baby Boom acquisition Financial Performance Overview - For Q3 fiscal 2025, net sales were $23.4 million, down 1.9% from $23.8 million in the prior year, driven by lower online toy sales and the loss of a major retailer's bid program [2] - Gross profit decreased 5.2% year over year to $6.1 million, with gross margin contracting to 26.1% from 27% due to changes in product mix and higher warehouse lease costs [3] - Operating income fell 26.9% to $1.7 million from $2.3 million, while net income was $0.9 million, or $0.09 per diluted share, a 47.5% decrease from $1.7 million, or $0.17 per diluted share, a year ago [4] Segment Performance - Sales of bedding and diaper bags grew 24.3% to $11.2 million, driven by the Baby Boom acquisition, which contributed $3.8 million [5] - However, sales of bibs, toys, and disposable products declined 17.8% to $12.2 million, primarily due to lower toy sales and the loss of a program at a major retailer [5] Key Business Metrics - Interest expense rose 87.9% year over year to $0.4 million due to increased borrowings for the Baby Boom acquisition [6] - Cash and cash equivalents increased to $1.1 million from $0.8 million, while total debt rose significantly to $20.9 million from $8.1 million [6] - Inventory stood at $32.4 million, up from $29.7 million, and operating cash flow increased to $6.9 million year to date compared to $4.1 million in the same period last year [7] Management Commentary - CEO Olivia Elliott highlighted the company's ability to maintain profitability amid economic uncertainty, focusing on expanding product offerings in diaper bags and high-end toys [8] - Management acknowledged constraints on consumer discretionary income impacting overall sales [8] Cost Management and Strategic Initiatives - The company is addressing rising costs due to new 10% tariffs on Chinese imports, negotiating with suppliers to absorb some costs while considering selective price increases [9] - Management is evaluating warehouse relocation options to reduce long-term leasing costs [9] - While no specific forward-looking guidance was provided, management emphasized maintaining cost discipline and driving top-line growth through product refresh initiatives and potential new retail placements in 2026 [12] Other Developments - Crown Crafts completed the integration of Baby Boom, acquired for $18 million, which expanded its product offerings in the diaper bag category [13] - The company declared a quarterly dividend of $0.08 per share, payable on April 4, 2025 [13]
CRWS Stock Falls After Q3 Earnings, Sales and Profit Decline