Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Crown Crafts Inc (CRWS, Financial) reported an increase in net sales to $24.5 million for the second quarter of fiscal 2025, up from $24.1 million in the prior year, primarily due to the acquisition of Baby Boom assets.
- The acquisition of Baby Boom Consumer Products has positively contributed to the company's bottom line and expanded its product offerings, particularly in the toddler segment.
- Gross profit improved to 28.4% from 27.3% a year earlier, reflecting a favorable change in product mix.
- The company remains in a strong financial position with cash and cash equivalents increasing to $2 million at the end of the second quarter.
- Crown Crafts Inc (CRWS) is optimistic about the upcoming holiday season and the potential for higher revenue, supported by strategic cross-selling opportunities among its brands.
Negative Points
- Net income for the quarter decreased to $860,000 or $0.08 per diluted share, compared to $1.8 million or $0.18 per diluted share in the prior year quarter.
- Marketing and administrative expenses increased significantly to $5.4 million, up from $4 million in the prior year quarter, partly due to costs associated with the Baby Boom acquisition.
- The company's legacy businesses experienced declines, including the loss of a bid program at a major retailer, which offset gains from the Baby Boom acquisition.
- Borrowings on the company's revolver increased to $20.8 million from $8.1 million at the end of fiscal 2024, reflecting the funding of the Baby Boom acquisition.
- Crown Crafts Inc (CRWS) faces challenges with weak point-of-sale performance across various retailers and product lines, impacting overall sales.
Q & A Highlights
Q: Could you provide an update on the status of your warehouse consolidation plans?
A: We are currently considering three locations and plan to conduct site visits before the Christmas holiday. We aim to narrow it down to two or one by the end of the fiscal year. - Olivia Elliott, President, CEO
Q: How is the sell-through of Manhattan Toy products at Walmart going?
A: The sell-through is doing well in Walmart's better stores. The products are popular and performing well. - Olivia Elliott, President, CEO
Q: Are you seeing improvements in Manhattan Toy's margins?
A: Yes, margins are improving as we develop new products and switch manufacturers, leading to better profitability. - Olivia Elliott, President, CEO
Q: How is the integration of Baby Boom's licenses, such as Bluey and CoComelon, progressing?
A: All licenses are performing well, with Bluey being particularly popular. Ms. Rachel's toddler bedding products are also promising. - Olivia Elliott, President, CEO
Q: Can you provide insights into your sourcing strategy given potential tariff changes with China?
A: Almost all products are sourced from China due to better costs and infrastructure. We continue to explore other countries but China remains the best option currently. - Olivia Elliott, President, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
