Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $23.3 million, a decrease from $23.8 million in the prior year quarter, primarily due to lower online toy sales [4] - Gross profit margin decreased to 26.1% from 27% in Q3 2024, attributed to changes in product mix and higher lease costs [5] - Net income for the quarter was $893,000 or $0.09 per diluted share, down from $1.7 million or $0.17 per diluted share in the prior year [7] - Cash flow from operations year-to-date was $7 million, compared to $4.1 million in the same period last year [7] - Cash and cash equivalents at the end of Q3 were $1.1 million, up from $829,000 at the end of fiscal 2024 [7] Business Line Data and Key Metrics Changes - The acquisition of Baby Boom contributed $3.8 million in net sales this quarter, partially offsetting declines in other areas [4][5] - Marketing and administrative expenses increased to $4.4 million from $4.1 million in the prior year, mainly due to acquisition-related costs [6] Market Data and Key Metrics Changes - The decline in sales was primarily seen in the Manhattan Toy brand, with disappointing holiday sales attributed to consumers trading down to less expensive toy lines [27][28] - The loss of the Target bib program in November 2023 also contributed to the decline in sales [71] Company Strategy and Development Direction - The company is focused on refreshing high-end toy and diaper bag lines while developing new products to complement existing categories [10] - The management is evaluating warehouse locations to reduce costs, with a preference for a West Coast location due to overall logistics [20][22] - The company is monitoring tariff updates and is optimistic about managing costs with suppliers to minimize consumer impact [11][78] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, particularly in diaper bags and new product placements [22][24] - The company remains well-positioned to navigate economic challenges while preparing for improved market conditions [12] Other Important Information - The company paid a regular quarterly dividend of $0.08 per share and declared the next dividend to be paid in April [9] - The company is considering price increases to offset potential tariff impacts but aims to minimize the effect on consumers [78] Q&A Session Summary Question: Warehouse location decision-making process - Management is considering cost, lead times, and logistics in deciding between two potential warehouse locations [17][20] Question: Update on diaper bag business initiatives - Positive meetings with potential licensors and retailers have occurred, with expectations for new placements in 2026 [22][24] Question: Status of Manhattan Toy brand and holiday sales - Holiday sales were disappointing, with a noted decline in the Manhattan Toy brand, but new product developments received positive feedback [27][28] Question: Effectiveness of overseas distributor for Manhattan Toy - The shift to a distributor system has been effective, with distributors picking up sales for the Manhattan Toy brand [30] Question: Tariff impact and supplier negotiations - Initial conversations with suppliers indicate potential for price rollbacks to offset tariff increases, with adjustments expected to be implemented immediately [78][80]
Crown Crafts(CRWS) - 2025 Q3 - Earnings Call Transcript