Crown Crafts(US:CRWS)2022-06-08 19:58Financial Data and Key Metrics Changes - Fourth quarter net sales increased to $25.7 million from $21.8 million year-over-year, representing a growth of 17.7% [6][15] - Fiscal year 2022 net sales were $87.4 million, up from $79.2 million in the previous year, marking a 10.4% increase [7][16] - Fourth quarter net income rose to $2.4 million, compared to $238,000 in the prior year, with adjusted net income at $2.6 million excluding Carousel impacts [9][25] - Fiscal year net income was $9.9 million, up from $6.1 million, with adjusted figures at $9 million when excluding Carousel and including a $2 million gain from PPP loan forgiveness [10][25] Business Line Data and Key Metrics Changes - Sales of bibs, bath, developmental toys, feeding, baby care, and disposable products increased by $9.9 million, while bedding, blankets, and accessories saw a decrease of $1.7 million [16] - The closure of Carousel Designs resulted in a $2.2 million decrease in gross profit, impacting overall profitability [20] Market Data and Key Metrics Changes - Internet-based sales accounted for almost 30% of total sales, while international sales represented 4.2% of current year sales [8] - The company experienced a shift back to brick-and-mortar shopping, affecting online sales [18] Company Strategy and Development Direction - The company aims to grow its toy category, enter new adjacent product categories, and enhance direct-to-consumer sales [27] - Strategies include cost efficiencies, technology investments, and maintaining a strong balance sheet while delivering returns to shareholders [27] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about recovering from previous operational challenges, including supply chain bottlenecks and increased costs [12][11] - The company is excited about opportunities for continued profitable growth in fiscal year 2023 [26] Other Important Information - The company declared a cash dividend of $0.08 per share, representing a 4.9% yield based on the closing price [13] - The fiscal year 2022 included an additional week compared to fiscal year 2021 due to a 53-week calendar [18] Q&A Session Summary Question: Plans to diversify customer base beyond Walmart and Amazon - Management acknowledged the need to diversify and emphasized direct-to-consumer strategies and international opportunities [30][31] Question: Relationship with Walmart - Management believes the relationship with Walmart is strong, focusing on meeting design and service expectations [32] Question: Competitive landscape at Walmart - Management noted significant competition for shelf space and the importance of meeting customer demands [33][34] Question: Ability to pass on increased costs - Management confirmed efforts to pass on costs where possible, with some categories being more price-sensitive [40] Question: Current inventory status - Management reported being in good shape with inventory, primarily consisting of current SKUs [41] Question: Direct-to-consumer initiative and its differences from Carousel - Management explained that the new model involves selling finished goods from inventory rather than custom manufacturing, which should improve efficiency [44] Question: Attracting traffic to the website for direct sales - Management indicated plans for advertising and utilizing third-party platforms like Amazon to drive traffic [45] Question: Expected profitability of direct-to-consumer sales - Management anticipates comparable dollar profitability but acknowledges higher advertising costs may affect percentage margins [46]