Crown Crafts (CRWS) investor relations material

Executive summary

• Net sales declined 4.5% year-over-year to $15.5 million for the quarter ended June 29, 2025, with a net loss of $1.1 million, or $0.10 per share, compared to $0.3 million, or $0.03 per share, last year, mainly due to tariffs and inventory shortages.

• Gross margin decreased to 22.7% from 24.5% year-over-year, primarily due to higher tariff costs on imports from China.

• The acquisition of Baby Boom Consumer Products contributed $2.1 million in net sales during the quarter and expanded the product portfolio, driving growth in bedding and diaper bags.

• Management remains optimistic about sales trends seen in July and is focused on navigating the challenging environment, including ongoing uncertainty around tariff levels.

• Strategic initiatives include the extension of a key Disney license, now covering Canada and new product categories.

Financial highlights

• Net sales were $15.5 million, a 4.5% decrease year-over-year, with gross profit of $3.5 million, down 11.3% year-over-year.

• Marketing and administrative expenses rose to $4.7 million, or 30.5% of net sales, up from 26.3% last year, driven by acquisition and advertising costs.

• GAAP net loss for the quarter was $1.1 million, or $0.10 per diluted share.

• Cash and cash equivalents at quarter-end were $227,000, down from $521,000 at prior fiscal year-end.

• Operating cash flow was $5.2 million, down from $8.0 million in the prior year, mainly due to increased inventory and net loss.

Outlook and guidance

• Management is cautiously optimistic for the remainder of the fiscal year, encouraged by July sales and ongoing mitigation of tariff impacts through price increases.

• Cash flow from operations and available credit are expected to be adequate to meet liquidity needs.

• Management does not anticipate a material change to the effective tax rate for the remainder of fiscal 2026 but notes several factors could impact it.

• Efforts to increase sales and market share continue, with a focus on financial flexibility.

• Ongoing uncertainty over tariff levels continues to affect consumer and supplier behavior.