Financial Data and Key Metrics Changes - Fiscal year 2025 total sales were slightly below the previous year due to persistent inflation and consumer pullback on discretionary spending [4] - Fourth quarter net sales increased by 2.9% year-over-year to $23,200,000, driven by strong Baby Boom product sales [8] - Full year net sales for fiscal 2025 were $87,300,000, a slight decrease from $87,600,000 in the prior year [11] - GAAP net loss for the fourth quarter was $10,800,000, primarily due to a $13,800,000 goodwill impairment charge [10] - Adjusted net income for the year was $1,000,000, translating to adjusted diluted earnings per share of $0.10 [12] Business Line Data and Key Metrics Changes - The Baby Boom acquisition contributed $11,900,000 in net sales, but this was offset by declines in legacy business lines [11] - Gross profit margin for the fourth quarter decreased to 18.3% from 23.2% in the prior year, attributed to higher tariffs and increased expenses [9] - Marketing and administrative expenses rose by 17% year-over-year due to increased advertising costs and expenses from the Baby Boom acquisition [10] Market Data and Key Metrics Changes - The company faced challenges due to uncertainty around U.S. tariff policy, impacting sales from imports [4] - The transition to using distributors in Europe is expected to enhance international sales over time [32] Company Strategy and Development Direction - The company is focused on long-term growth through acquisitions and expanding product offerings, including the recent acquisition of Baby Boom Consumer Products [5] - Plans to mitigate tariff impacts include working with manufacturers and retail partners to absorb costs [17] - The company aims to explore product and channel expansions to increase sales and market share [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the economic headwinds affecting consumers and the company, but emphasized steps taken to position for long-term success [16] - The most pressing challenge is navigating the impact of tariffs, with a current expectation of a 30% tariff on goods ordered [17] - Management expressed optimism about future growth opportunities and the integration of acquisitions [16] Other Important Information - Cash flow from operations for 2025 was $9,800,000, an increase from $7,100,000 in the prior year [13] - The company paid $0.32 per share in cash dividends, marking the fifteenth consecutive year of dividend payments [14] Q&A Session Summary Question: Update on warehouse status - The company is still exploring options for the warehouse but has focused on tariffs recently [23] Question: Outcome of the New York Toy Show - The sales and product development team received positive feedback and wrote some orders at the Toy Fair [25] Question: Status of the Stella doll redesign - The new Love Stella line has been well-received, aided by marketing efforts including mentions by Meghan Markle [26] Question: Sales to LEGOLAND - Sales to LEGOLAND increased in fiscal 2025, with expectations to be the only plush supplier in the park soon [29] Question: Development of licensed diaper bags - The company is excited about potential licensed diaper bags but is facing challenges due to tariffs [30] Question: Update on tax credit for baby products - No recent updates on the potential tax credit for parents have been heard [31] Question: Impact of using distributors in Europe - The transition to distributors is expected to positively impact international sales [32] Question: Redesign of the Manhattan Toy website - The redesigned website has improved user experience and is driving more traffic [34]
Crown Crafts(CRWS) - 2025 Q4 - Earnings Call Transcript