CRWS - Earnings call transcript Q3 2025

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Operator

Good day, everyone, and welcome to the Crown Crafts, Inc.

Third Quarter Fiscal 2025 Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to John Beisler with Three Part Advisors, the company's Investor Relations firm. Please go ahead.

John Beisler

good and Jamie, you, morning, everyone. Thank you Quarter Fiscal appreciate joining us Third Crafts' Crown the XXXX for We Conference Call.

release Joining Elliott; CFO, this and Crown crowncrafts.com. A their company's me morning are release a Form financial results. third its Crown the call this on XX-Q website, regarding Crafts' Crafts and copy filed CEO, and is Demarest. Craig Olivia company's on the Earlier today, quarter available press XXXX the issued President of fiscal

During company differ statements, from risks These update the the may today's actual those and is and subject control, that are company implied. to forward-looking these call, be under certain statements. make will Crafts' obligation beyond or results to materially may uncertainties statements Crown and expressed no

risk other Commission. the please the For uncertainties, to filings about Exchange Securities the and more information factors and company's with company's refer

Finally, the I and remind will recorded, to replay be today's Investor being is company's you call would like available Relations through a page.

Now I Elliott. turn to over CEO, call President the and the Olivia would like to

Olivia Elliott

for you, you everyone, Good today's call. morning, and thank John. Thank joining

we this Our our In this has profitability expenses. of continued economic challenging of managing controllable delivering flow to results uncertainty. our remained fiscal face strong have year, headwinds on cash our during proactively flow focused period the to reflect third generate cash and quarter and spite ability team operating

so new spend future also we of growth We develop to items. are categories well products consumers ready discretionary more that some positioned continue to capitalize when refresh are and on to on our

new the of categories, million for sales Boom, us. which optimistic remain our of report this a During Baby quarter. including category which we acquisition, added the We the to quarter, integration completed bags, were product future recent we are these diaper in excited $X.X most about

I'd comments cover will I financials questions. that, with before more follow additional up it to over Craig the to to detail, taking like turn With in then

Craig Demarest

November for The year sales and online fiscal the million Net attributable at $XX.X prior lower primarily everyone. the the were in This related which the $XX.X million program net is by bid retailer. fiscal morning, to to the of of good this and compared a offset we partially in quarter. of $X.X Baby was 'XX second of decrease sales third sales addition loss in 'XX the Olivia, year. acquired quarter of you, Thank a toy to quarter in million Boom, major

slight to the be profit quarter Gross can for compared costs quarter product California. margin mix, for together higher of with decrease XX.X% attributed was changes to third XX% in warehouse 'XX. in The the fiscal in our lease

continue evaluate to footprint to reduce costs in through look 'XX. our strategic our and consolidation We warehousing fiscal

quarter prior The marketing Boom, in including $X.X is expenses related administrative quarter. and with to associated $X.X compared primarily Our year in $XXX,XXX million acquisition-related to expenses third the purchase million were the increase of Baby costs.

diluted Baby for expense $XXX,XXX to share quarter. quarter income was Interest diluted compared per or $XXX,XXX higher due quarter prior share million year acquisition. or borrowings the net year the Net $X.X prior quarter from the $X.XX related to the for in of $X.XX to income the per increased Boom the

the was the 'XX, same in compared borrowed flow $X.X cash facility sheet. cash balance under at end the financial million as Borrowings We were 'XX. quarter of our $XX.X of third in the equivalents a the position remain quarter year. to fiscal end million the our of operations credit end compared last third the million the at the amounts Baby $X Boom compared quarter to now reflecting were strong cash Year-to-date from and million end to at second fiscal Turning at through the the in of to to fund period of acquisition. million $X.X quarter, $X.X end $XXX,XXX

We to our due inventory always, from timing debt cash to may purchases quarter-to-quarter of balance our repay expect fluctuate as capital to the needs. however, flow borrowings; and our use other working

Our 'XX $XX.X inventory of with Boom December added in declined of in the acquisition. in to balance $XX.X even 'XX, December million million has inventory Baby the from

Finally, which we paid be our our dividend $X.XX in paid regular per share declared April. and quarterly next of dividend, will

Now I'll additional to turn comments. Olivia the call for back over

Olivia Elliott

Craig. you, Thank

on our maintaining line ahead, Looking growing while our is discipline. focus top cost the

our In Chinese product toy focused updates out made. new our products as complement tariffs, imports, bag it current to regarding virtually lines where our are the also of couple of and addition high-end diaper acquired refreshing on announced products development the We're our Washington to to over past particularly all are pertains ongoing teams categories. on monitoring years, XX% of

our work remains suppliers best increases. need to to consider increase option, China we the absorb will our with sourcing and price As

Overall, We current we the navigate continue that narrowed remain preparing to our to to we've to positioned relocate warehouse. brands as visiting review our each. of down well evaluate conditions economy potential to profiles and locations After locations, X the financial to perform while X continue improve.

to balance cash and as our dividend which is Our flow, strong, pay are continue manage stands we shareholders. our a component long-term key to to to and our our effectively sheet strategy value able in borrowings deliver operating through

questions. open I'd for like that, the And to Jamie? up with line

Operator

today Financial comes first Services. [Operator Ruth from Lenox question Doug from Instructions] Our

Douglas Ruth

things the the some to us color that Could you'll you the about that you're little give decision of tell how seeing things the tell to thinking of you or and some you've got how a what possibilities down now warehouse? make that could warehouse you're ultimately locate -- the time us more us X, on

Olivia Elliott

consideration the lead of at part being look big times. to That need is said, cost. we be obviously going to A

also to may the to bit a to the our go there's to is And bigger the across Coast be way rates cost Coast, the on higher. lease on and is downside. of take should East you the goods the And little options to the the going the freight final One impact Coast. in while cost all more one going longer. country a It's closer get up East going West to closer is save

So we're looking at picture. big the whole

and We're focused put that done on be can look the mainly the For either want the of into warehouses to the may all exactly location. most location any we at part, the type same. technology warehouses

Douglas Ruth

Are totally point? or over undecided at you leaning another location like you're this towards one

Olivia Elliott

Probably specifically the leaning actual the a we West for just get bit towards trying the the package, little together Coast overall at. get still location of we're and that quotes but locations were looking the all from to information

Douglas Ruth

Okay.

you on? you're update business bag the and Now the us of changing -- could that focused on give an initiatives diaper some

Olivia Elliott

Sure.

for category that a meetings what some to very of seems think a some diaper We've some had we've refreshed both We've people with with some some I had be designs, It good really meetings So good the bags. silhouettes, refreshed done interested lot good retailers. are some in. new are looks. potential licensors also

new we've won't placed great July. get XXXX did showing, that had lines hoping already for the we some of time though I think it a we're we've and in be by until been XXXX been got to in placement that, deck the because most the acquisition

year good so So pick opportunity I think placement. got to some we've up coming or in the a next

Douglas Ruth

there's about is opportunities that both Now international, potentially that what and domestic thinking you're still you both in had both places? talked

Olivia Elliott

do We're that's domestic we Yes, because both. in focusing places. both first I opportunity, think bigger think opportunities a we but on there's can yes

Douglas Ruth

sales? and the Okay. of share are the Manhattan -- can also you with And Walmart? the holiday Toy? How then placement anything status And what's through

Olivia Elliott

I'll The Walmart doing at one is the easy So take first. well. placement

keep that out. to Walmart expect another We year. that placement least at for in We found

the where placement, get think -- just less we lines have it didn't still Manhattan we holiday more saw we decline The Toy down had go at well. going to toys. It disappointing. year biggest We think we So That's in people that so trading was were as well opportunities were the think maybe that's brand. the of think we sales before. to the sales expensive most as

biggest that's for this I was think continue we our holiday season. So said, being new products. to That where develop disappointment

positive have itself, We to positive the that. We've of specialty the good I development. about things the stores, a retailers, guess, say et job refreshing think that we've -- they cetera, done had really the new customer

think holiday opportunity I So this didn't season. come just still an there. there's It

Douglas Ruth

been Manhattan that company? about for what distributor And the has Okay. the the working overseas with for effective Toy,

Olivia Elliott

Yes.

we are picking them international to a yes, and distributor office, the of And the most London some strictly -- system front. based closed Manhattan on of we've had up And Toy gone our so the distributors have sales.

to And to so that's grow. a continue bigger definitely opportunity

Douglas Ruth

what's Okay. And with then at point? what the -- LEGOLAND relationship what's this about -- happening

Olivia Elliott

building parks. They're new LEGOLAND to grow. continues

to think expect Park XXXX. Shanghai the open here I we in

so there. continue grow And to we

Douglas Ruth

at Yes. up the fourth LEGOLAND? sales Were quarter

Olivia Elliott

the a closed So the for are parks winter. lot of LEGOLAND

the ones in the have a of you So couple U.S.

the are open think, during I closed. them and rest of the but Florida stay season, California winter

think open mainly October. to April I they

Douglas Ruth

somebody let could I maybe some can and but questions, more ask few a back have come questions I for Okay. some more. else I

Olivia Elliott

Okay.

Operator

comes question Deysher John from from Your Pinnacle. next

John Deysher

to just Warehouse various question 'XX The I a expires June Are have just want lease Eden 'XX. I those Minneapolis expiring. confirm I of on when Valley June correct? real quick and June 'XX. the in headquarters all leases of the the expires Compton understand of are expires estate.

Olivia Elliott

I 'XX. But believe Valley the are that's yes, and Minneapolis is March close. of Compton correct. ones the The Eden

Craig Demarest

June quarter in 'XX. expires of is definitely June the Compton Valley Eden 'XX.

right. in first That You're that range. one is

Olivia Elliott

range. that in Is

John Deysher

Okay.

on going Valley X.XX a expire all mean, to so. the It Eden years pretty about I to close. or they're going warehouse making you're pretty in like new that So decision soon? given is sounds be

Olivia Elliott

Yes.

location final in We'll the pretty on Compton decision in meantime. a make have soon. the we'll think sublease I to

kind So if right. we use take it are whatever the ready. some expires the the that is but could XPL move Eden reason, before step. We're ready, of for to thinking the we're those And have warehouse until temporarily going interim we final to warehouse timing process, ahead get that through we'll goods but location, those go move be to -- a and Valley

of balancing that we're it's a kind act working through. So

John Deysher

understand. I Right.

decision say is the it be? what to might fiscal I by So fair could year-end, we your know mean...

Olivia Elliott

it's mean, if think we'll location. be tell June, not I possibility. final I to able the think August, by you a I

John Deysher

Okay.

And midyear. about be? -- that So what's the to going headquarters? what Where transition Minneapolis

Olivia Elliott

into the It was big we have We for the personnel big too a that what date acquisition, of on was space. too smaller now. certainly for need get to there

we working sooner really so try a out. to And solution to to later, downsize with up were work than that but come didn't rather

and, lease less frankly, won't downtown, we maybe stuck back but location out, of could the quite much out there location. a We get smaller, that expensive until we're the particular on runs go outskirts. So into

John Deysher

you're keep to going move But not going it Gonzales? to you're in to everybody Minneapolis, Okay.

Olivia Elliott

but No, Gonzales. something. office, keep a move will need to be to It won't we small everybody we'll

Operator

next follow-up from our Ruth from And Lenox. question Doug is a

Douglas Ruth

Okay.

some new toys. about you're that you any You development about? toy excited Is there especially talked in had that have developing certain

Olivia Elliott

it's about to the better going to that specifically, is We store that only the year. line think side, toy doll new starting the many the then Stella And side looking Well, Toy, that on redesigned we're we the on side. program, can and production specifically line. in at still actually so specialty into and new -- I now. the really There's products mostly a really for be we're think you Manhattan option each excited toy if refreshing just develop get ship you're

So is really working products. just of just we're to still on out refresh everything overall the ballpark out of it well. Sassy those develop the knock and working continues we

Douglas Ruth

specifically it think? that about a you selling doll is point, the What is do Stella

Olivia Elliott

great price is dolls. the So was one -- differential the but There that smaller forget were it. than I pretty other was sizes is, there thing the them there of what one I was biggest mean X -- of one the second on and was

And doll stopped getting bigger doll. the so everybody smaller and started the buying

what can is we that the done refreshed dolls size hit manufacturing the we've really the we've better. and facilities of price just we've moved And point so so and

Douglas Ruth

smaller bigger you'll between bigger the price and so of the great, dolls? possibly in difference more not the the doll doll as So is sell

Olivia Elliott

different happened Well, same, case except dolls X they sizes. were look the what was that the for in

the smaller size. So to everybody traded down

next doesn't doesn't and And still them removable we're infant you have dolls, It separate you And doll to so more size doll. X the going mainly. baby's kind hair. have of a toddler. clothes. the we're have first into become as One It is gearing grow then it's but doll an of

dolls differentiated more. the we've So

Douglas Ruth

right. All Okay.

level a noticed quite I right the the the in marketing spend Did now? approximately you feel Now like third change in expense that quarter. was at

Olivia Elliott

third versus quarter quarter year? year this last third So

Douglas Ruth

I It correctly. the lower, that Yes. if Yes. was marketing looked like expense read

Olivia Elliott

were and a up No, to Baby flat. is continued integration it's actually expenses for Otherwise, difference going mostly it's Boom. bit, the costs be -- marketing mostly the little

Douglas Ruth

I expense, sorry. misspoke. I'm advertising I meant the

Olivia Elliott

No, have spend more I a bit little drive those think, advertising to on we're going online to to sales.

sale. Toy, that's probably mark think than acquired we I when were is the Manhattan more first where the we advertising the missed costs most

pulled so And back back think we too that I we've on pulled far. spend, and

higher to to online, we're think some going drive have spend. So sales do more to I in order

Douglas Ruth

Yes.

an you that if Manhattan they you the were sort You were? -- spent Toy possibly might experiment more, of was higher this than would have possibly, explained previously been so actually and have sales

Olivia Elliott

I think it's likely, yes.

Douglas Ruth

when then talk revenue? you on should should an about should what of expense, just and as marketing like the administrative And be -- annual the Okay. percent big basis, picture, what a what that

Olivia Elliott

something don't answer forecast. we That's because just we're not probably to going

Douglas Ruth

-- about large one How or provide you of of most from the -- we kind to are bibs, Okay. when the about any the X of -- breakdown decline in well, the was able talk toys then disposables, do decline categories? category, you the different additional

Olivia Elliott

toys bibs, and was decline Toys. primarily disposables the So the Manhattan in

program for be November of bib going was out We small we also lost 'XX. the the of had last loss a decline bit Target the run that the in of of part to

year of that QX vast of had it customer. we quarter bid fiscal was had so Manhattan the whereas the sales, But about this X Toy half none last brand. And majority the year, had for of

Douglas Ruth

Okay.

that what's the happening taking really that the of think for with like shareholders. I you care a the are terrific the you're folks doing job. progression I I appreciate warehouse.

you Just what I'm doing And for for the location decision grateful trying warehouse. very make to shareholders. for that really the best you're to can get the the right there

Olivia Elliott

Thank you, Doug.

Operator

Pinnacle. next John Deysher our another And is follow-up from question from

John Deysher

that What it that to I or the increase, measures -- XX% with offset what I you regarding does share what into the guess, vendors? taking effect? the And when either are Or are go guess, options? tariffs,

Olivia Elliott

of much our enough roll the initial our suppliers that to prices China immediately. indicates So our cover cost it pretty of out out probably back to going first into conversations majority Actually, effect be goes initial with of China purchase vast we're able prices, it. to

the small to category, based So that can some a with consumer. retailers we to initial prices really supplier, to customers and may impact while our depending option a degree, likely like raise feels have our on it we minimize to hopeful the on depending suppliers. conversations And to our are we that's on

John Deysher

purchase way go When That's of Okay. that Good. effect into the the prices? the rollback encouraging. or other, will one

Olivia Elliott

Immediately.

pretty So I mean, the rollbacks much need we in concurrent with to have tariffs. those the increase

that that you've roll back But So there got the in certainly or be already not for already do in product we able may was may we either what's some ocean was -- to be quickly. new some oftentimes, that on look, price lower production. to already production the but say, that on in production, any

John Deysher

have point? you do in agreements at But writing Right. those this

Olivia Elliott

our We as as it PO-by-PO don't much agreements makes actually a have basis, which on to soon easier with possible. change suppliers. It's

John Deysher

submitted vendors? been recently the And you POs have by Okay. that the okayed

Olivia Elliott

it mean, any with can submitted the but haven't we absolutely, back and we go can. the lower I We've new change prices. done Well, prices, we before.

John Deysher

Okay. All right.

in Okay. process a fine. work it's like sounds at point. That's It this

Olivia Elliott

weeks. past It's absolutely. changing of of here Yes, the for kind ever couple

Operator

be Olivia we'll I'd for this the turn time, Elliott today's to floor to like closing back that, gentlemen, question-and-answer and remarks. with ladies over concluding At any And session.

Olivia Elliott

you, continued our we company. to We Thank your look interest June. results fourth year XXXX Thank and again speaking forward fiscal you with for in our in when quarter you report Jamie.

Operator

And ladies do and and you we'll today's with that, conference presentation. conclude thank gentlemen, for call joining. We

disconnect You lines. your may now

Crown Crafts (CRWS) 12 Feb 252025 Q3 Earnings call transcript