Crown Crafts(US:CRWS)2024-02-14 15:39Financial Data and Key Metrics Changes - Net sales for the third quarter of fiscal 2024 increased approximately 25% to $23.8 million compared to $19 million in the prior year quarter, attributed to the addition of Manhattan Toy, which contributed $6 million in net sales [41] - Gross profit for the quarter was 27% compared to 23.7% in the third quarter of fiscal 2023, indicating a return to historical margin levels [5] - Net income for the quarter was $1.7 million or $0.17 per diluted share compared to net income of $1.3 million or $0.13 per diluted share in the prior year quarter [5] - Cash and cash equivalents at the end of the third quarter were $683,000 compared to $1.7 million at the end of fiscal 2023 [32] Business Line Data and Key Metrics Changes - Inventory at the end of the quarter was $34.9 million compared to $34.2 million at the end of fiscal 2023, with NoJo and Sassy inventory levels declining from $25.8 million last year to $22.7 million this year [4] - Marketing and administrative expenses increased to $4.1 million in the current year quarter from $2.7 million in the prior year quarter, primarily due to expenses associated with Manhattan Toy [5] - The Toy category is projected to represent nearly half of overall sales for fiscal 2024, up from just 17% at the end of fiscal 2023 [6] Market Data and Key Metrics Changes - The reopening of 11 buybuy Baby stores is expected to provide gradual benefits as they roll out more locations, which will enhance consumer access to products [14] - The company continues to face economic pressures affecting consumer discretionary income, particularly at the lower end of the income scale due to higher interest rates and the resumption of student loan repayments [14] Company Strategy and Development Direction - The company is focused on long-term strategic growth, particularly in the Toy category through market share expansion within Sassy and Manhattan Toy [6] - Plans to enter new and adjacent product categories through organic growth and strategic acquisitions are underway, with product development aimed at bringing select items from the Manhattan Toy lineup into Walmart [33] - The company is exploring operational efficiencies, including the potential combination of warehouses and possibly relocating to reduce manufacturing costs [45][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a more favorable economic outlook as the year progresses, despite ongoing inflationary pressures on consumers [30] - The long-term prospects of the company remain favorable, supported by a strong track record and commitment to delivering shareholder value [43] 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, offering an annualized yield of just over 6% based on the previous closing price [32] Q&A Session Summary Question: Can you talk about the success in lowering Manhattan Toy manufacturing costs? - The company has managed to achieve some decreases in manufacturing costs across various channels and is hopeful for further reductions as they deplete higher-cost inventory [45][46] Question: What is happening with the potential combination of warehouses? - The company is in the early stages of exploring warehouse locations, possibly outside California, with a commitment to a long-term solution expected within the next 18 months [47]