Crown Crafts Reports Slight Decline in Net Sales for Fiscal Year Ending March 30, 2025

Crown Crafts, Inc. reported a slight decline in net sales for the fiscal year ending March 30, 2025, totaling $87.3 million, down from $87.6 million in the previous fiscal year. This represents a decrease of $382,000, or 0.4%. The company experienced a notable increase in sales of bedding and diaper bags, which rose by $9.0 million, largely attributed to the acquisition of Baby Boom Consumer Products, Inc. However, this was offset by a $9.4 million decline in sales of bibs, toys, and disposable products, primarily due to reduced inventory levels at a major retailer and the loss of a program with another retailer. Gross profit also decreased, falling from 26.2% of net sales in fiscal year 2024 to 24.4% in fiscal year 2025, driven by increased royalty expenses and higher operational costs.

In terms of operational changes, Crown Crafts completed the acquisition of Baby Boom Consumer Products on July 19, 2024, for $18 million, funded through a combination of a term loan and additional borrowings. This acquisition is expected to enhance the company's product offerings and market presence. The company also reported an increase in marketing and administrative expenses, which rose by $2.6 million to $18.7 million, reflecting costs associated with the acquisition and the closure of its UK subsidiary. The company’s employee count remained stable at 168 full-time employees.

Crown Crafts' customer base remains concentrated, with its top two customers, Walmart and Amazon, accounting for approximately 66% of gross sales in fiscal year 2025. The company noted that sales of licensed products constituted 50% of total gross sales, with a significant portion linked to agreements with Disney. The company faces challenges from macroeconomic conditions, including inflation, which has led consumers to opt for lower-priced items or reduce purchases altogether. Additionally, the imposition of tariffs on imports from China has increased costs, impacting the company's ability to maintain pricing.

Looking ahead, Crown Crafts anticipates that its cash flow from operations and available credit will be sufficient to meet liquidity needs. However, the company acknowledges that its future performance is subject to various risks, including economic conditions, competitive pressures, and potential disruptions in its supply chain due to geopolitical tensions. The company is committed to addressing its internal control weaknesses and enhancing its operational efficiency to navigate these challenges effectively.