Release Date: June 28, 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 a year of profitability despite economic challenges.
- Net sales for the fourth quarter increased to $22.6 million from $21.6 million in the prior year quarter.
- Gross profit margin improved to 23.2% from 21.9% in the fourth quarter of the previous fiscal year.
- The company successfully reduced its debt by $4.6 million from the end of fiscal 2023.
- Crown Crafts Inc (CRWS) paid $0.32 per share in cash dividends, maintaining a yield of 6.4%.
Negative Points
- Inflationary pressures continue to raise costs for materials and labor, impacting operations.
- Net income for the year decreased to $4.9 million from $5.7 million in the prior year.
- Cash and cash equivalents dropped to $830,000 from $1.7 million at the end of the previous fiscal year.
- The company faced a decline in its bedding, blankets, and accessories business.
- The integration of Manhattan Toys led to increased marketing and administrative expenses, rising to $16.1 million from $12.7 million in the prior year.
Q & A Highlights
Highlights of Crown Crafts Inc (CRWS) Q4 2024 Earnings Call
Q: Could you provide a projection for Manhattan Toy's sales for fiscal 2025?
A: Olivia Elliott, President and CEO: We don't give specific projections, but we aim for long-term growth. We previously stated a goal of $24 million in sales over three to four years.
Q: Is there potential for Manhattan Toy products to be placed in Walmart in fiscal 2025?
A: Olivia Elliott, President and CEO: Yes, we already have some placement in Walmart, which will start shipping between the first and second quarter of fiscal 2025.
Q: Any updates on combining the Compton warehouse and Manhattan Toy warehouse?
A: Olivia Elliott, President and CEO: We are exploring this and have engaged a third-party to help determine the best location. Any changes will likely happen in fiscal 2026.
Q: How is the direct-to-consumer business progressing?
A: Olivia Elliott, President and CEO: Manhattan Toy's website is operational for direct-to-consumer sales. We are working on getting Sassy's website up and running, aiming to have all subsidiaries selling direct-to-consumer by the end of fiscal 2025.
Q: How is the business with buybuy Baby progressing?
A: Olivia Elliott, President and CEO: We are shipping to 11 reopened buybuy Baby stores, but their expansion has been slower than expected.
Q: Can you comment on the decline in Manhattan Toy's sales year-over-year?
A: Olivia Elliott, President and CEO: Some decline was planned due to stopping shipments to customers with poor credit and reducing unprofitable direct-to-consumer advertising. We expect sales to pick up as we improve costings and move production to new factories.
Q: What caused the sequential decline in gross margins in Q4?
A: Olivia Elliott, President and CEO: The decline is due to seasonal timing issues, particularly related to Chinese New Year, which affects inventory levels.
Q: Is a 29-30% gross margin achievable in the future?
A: Olivia Elliott, President and CEO: It's possible in the long term, but current rent increases at our California warehouse are impacting margins. We are working on a long-term solution.
Q: Are you looking for a lower-cost facility to address the high rent in California?
A: Olivia Elliott, President and CEO: Yes, we are working with a third-party to find a long-term solution, which will take 18 months to two years to implement.
Q: How is the Legoland business performing?
A: Olivia Elliott, President and CEO: The business is doing well, with three new parks expected to open, including two in China by summer 2025, which will expand our international sales.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
