Crown Crafts Reports Decline in Sales and Gross Profit Amid Increased Tariff Costs

Crown Crafts, Inc. reported a decline in financial performance for the three and nine-month periods ending December 28, 2025, compared to the same periods in the previous fiscal year. For the three months, net sales decreased to $20.7 million from $23.4 million, a drop of 11.3%. The nine-month figures also reflected a decrease, with sales falling to $59.9 million from $64.0 million, marking a 6.5% decline. The decrease in sales was primarily attributed to a significant drop in bedding and diaper bag sales, which fell by $3.3 million and $4.4 million for the respective periods, largely due to reduced item counts in major retailer programs and inventory shortages linked to increased tariffs.

Gross profit for the three-month period was $4.9 million, down from $6.1 million, resulting in a gross margin of 23.5%, compared to 26.1% in the prior year. For the nine-month period, gross profit decreased to $15.0 million from $17.0 million, with a margin of 25.0% versus 26.6% previously. The decline in gross profit was primarily driven by increased tariff costs on imported products from China. Marketing and administrative expenses rose to $4.97 million for the three-month period, up from $4.40 million, and to $14.39 million for the nine-month period, compared to $14.11 million, reflecting higher advertising costs and severance expenses related to operational consolidations.

Crown Crafts also reported a notable increase in other income, which rose to $2.5 million for the three-month period, largely due to $2.5 million in insurance proceeds from claims related to the acquisition of Baby Boom Consumer Products, Inc. This contributed to a net income of $1.51 million for the three months, a 69.1% increase from $893,000 in the prior year. For the nine-month period, net income was $1.56 million, up from $1.43 million, reflecting a 9.2% increase.

The company continues to navigate challenges related to its supply chain, particularly due to tariffs affecting costs and inventory management. As of December 28, 2025, Crown Crafts had a balance of $11.3 million on its revolving line of credit, with $10.6 million available based on eligible accounts receivable and inventory. The company is focused on improving its internal controls and has implemented measures to address previously identified weaknesses in its financial reporting processes.

Looking ahead, Crown Crafts anticipates that its cash flow from operations and available credit will be sufficient to meet liquidity needs. However, the company remains cautious about the potential impacts of economic conditions, competitive pressures, and ongoing tariff challenges on its future performance. The management is committed to enhancing operational efficiencies and exploring opportunities for growth within its product lines.