Core Insights - Companies heavily reliant on China for product sourcing are experiencing significant gross margin degradation due to tariffs, with micro-cap stocks seeing declines of 50-700 basis points [1] - Despite challenges, two micro-cap companies have successfully adjusted to tariffs through cost restructuring and sourcing diversification, making them appear attractively valued [2] Company Summaries Crown Crafts, Inc. (CRWS) - Crown Crafts specializes in infant, toddler, and juvenile products, with Walmart and Amazon as key customers, contributing 47% and 19% of fiscal 2025 gross sales respectively [3] - In the latest quarter, Crown Crafts faced a 3.1% decline in sales and a 70 basis point erosion in gross margin due to tariffs, yet managed to increase EPS year-over-year from $0.08 to $0.11 [4] - Administrative and marketing costs decreased by 13.6% year-over-year, with further cost savings expected from management's consolidation plan by fiscal 2027 [5] - The stock is trading at 3.2X trailing 12-month EV/EBITDA, significantly lower than industry averages, with a current dividend yield of 11.72% [6] Hamilton Beach Brands Holding Company (HBB) - Hamilton Beach operates in two segments: Home and Commercial Products (74% of total revenues) and Health (26% of total revenues), with Walmart and Amazon accounting for approximately 29% and 24% of revenues respectively [7][9] - The company experienced a one-time 690 basis point hit to gross margin from tariffs but has implemented pricing actions and diversified manufacturing to mitigate future risks [10] - The Health segment's operating profit turned positive, and the premiumization strategy through the Lotus brand has shown strong sell-through performance [11] - A 15.2% year-over-year drop in revenue was attributed to trade paralysis among major retail customers, but there are signs of recovery as trade conditions stabilize [12] - The stock is currently trading at 6.26X trailing 12-month EV/EBITDA, with support around a tangible book value of $11.48/share [13] Market Context - Both companies have significant exposure to consumer spending, particularly through Walmart, which is managing macroeconomic challenges effectively [14]

Core Viewpoint - Crown Crafts, Inc. reported a net income growth despite a slight decline in overall sales, indicating resilience in navigating industry challenges, particularly due to tariff pressures on margins [2][4]. Financial Performance - Net sales for the second quarter of fiscal 2026 were $23.7 million, down from $24.5 million in the same quarter of the previous year [4][10]. - Gross profit margin decreased to 27.7% from 28.4% year-over-year, primarily due to increased tariff costs on imported products [5][10]. - Net income increased to $1.2 million, or $0.11 per share, compared to $0.9 million, or $0.08 per share, in the prior year quarter [10]. Cost Management - The company successfully reduced marketing and administrative expenses by $0.7 million, representing 19.9% of net sales, down from 22.3% in the previous year [6][10]. - Ongoing efforts to consolidate internal operations aim to eliminate redundant costs and achieve further savings [3][4]. Dividend Declaration - The Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on January 2, 2026, to stockholders of record as of December 12, 2025 [7][10]. Strategic Focus - The company is focused on leveraging prior acquisitions, expanding product lines, and utilizing pricing strategies to enhance long-term shareholder value as consumer demand stabilizes [4][10].

Core Viewpoint - Crown Crafts, Inc. is set to release its second quarter fiscal 2026 operational results on November 12, 2025, before market opening, with a teleconference scheduled for discussion [1] Company Overview - Crown Crafts, Inc. designs, markets, and distributes a range of infant, toddler, and juvenile consumer products, and is one of the largest producers in the U.S. for items such as infant bedding, diaper bags, and toys [4] - The company operates through subsidiaries NoJo Baby & Kids, Inc. and Sassy Baby, Inc., offering products under various trademarks and private label programs [4] - Sales channels include mass merchants, chain stores, specialty stores, and direct-to-consumer through its websites [4] Teleconference Details - The teleconference will be hosted by Olivia W. Elliott, President and CEO, and Claire K. Spencer, Vice President and CFO, at 8:00 a.m. Central Standard Time [1] - Interested participants can join by calling (844) 861-5504 or listen online via the company's website [2] - A replay of the teleconference will be available for one hour after the call until 4:00 p.m. Central Standard Time on February 10, 2026 [3]

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]

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]

Core Viewpoint - Crown Crafts, Inc. is set to release its fourth quarter and full year results for fiscal 2025 on June 25, 2025, before market opening, with a teleconference scheduled for discussion [1] Company Overview - Crown Crafts, Inc. designs, markets, and distributes a range of infant, toddler, and juvenile consumer products, and is one of the largest producers in the U.S. for items such as infant bedding, diaper bags, and toys [4] - The company operates through subsidiaries NoJo Baby & Kids, Inc. and Sassy Baby, Inc., offering products under company-owned trademarks and licensed collections [4] - Sales are directed to various retailers, including mass merchants and juvenile specialty stores [4] Teleconference Details - Interested parties can join the teleconference by calling (844) 861-5504 or by accessing it in listen-only mode via the company's website [2] - A replay of the teleconference will be available one hour after the call until September 25, 2025, at 4:00 p.m. Central Daylight Time [3]