Q3 2022 Crown Crafts Inc Earnings Call
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Speaker 1: This is the conference operator. The Crown Crafts conference call will be starting in a faculty 60 seconds. Thank you for holding.
Speaker 2: ["Pomp and Circumstance"]... On second thought, the monitors became evenashing.
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Good morning, and welcome to the Crown Crafts incorporated third quarter fiscal year 2022 conference call.
Speaker 1: Good morning and welcome to the Crown Crafts Incorporated third quarter fiscal year 2022 conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Sarky followed by zero.
Speaker 1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.
Please note this event is being recorded.
Speaker 1: I would now like to turn the conference over to Craig Demarest, Chief Financial Officer. Please go ahead.
I would now like to turn the conference over to Craig <unk> Chief Financial Officer. Please go ahead.
Thank you Gary.
Speaker 3: Welcome to the Crown Crafts Investor Conference call for the third quarter of fiscal year 2022. With me today are Randall Chestnut, the company's chief executive officer, and Olivia Elliott, the company's president and chief operating officer.
Welcome to the Crown Crafts Investor Conference call for the third quarter of fiscal year 2022 with me today are Randall chestnut, the company's Chief Executive Officer, and Olivia Elliott, the company's President and Chief operating Officer.
Speaker 3: A telephone replay of this call will be available one hour after the end of the call through 4 p.m. Central time on February 16th, 2022.
A telephone replay of this call will be available one hour. After the end of the call through four PM Central time on February 16th 2022.
Speaker 3: Also, a web replay of this call will be available for 90 days and can be accessed by visiting our website at www.crowncrafts.com.
Also a web replay of this call will be available for 90 days.
And can be accessed by visiting our website at www Dot crown crafts Dot com.
Speaker 3: Before we begin, I would like to remind listeners of the cautionary language regarding forward-looking statements contained in the press release. That same language applies to comments made in today's conference call.
Before we begin I would like to remind listeners of the cautionary language regarding forward looking statements contained in the press release that same language applies to comments made in today's conference call.
Speaker 4: I will now turn the call over to Randall. Craig, thank you very much and good morning to everyone on the call. And thank you for joining us for the third quarter physical 2022 conference call.
I will now turn the call over to Randy.
Craig Thank you very much and good morning to everyone on the phone on the call and thank you for joining us for the third quarter physical 2022 conference call.
Speaker 4: As Craig said, with me in the conference room today is Olivia Elliott and Craig. We're happy with the results of the quarter, but we did confront many notable challenges during the quarter, and management responded promptly to these challenges.
As Craig said with me in the conference room today, as Olivia Elliott and Craig.
We're happy with the results of the quarter, but we did confront many notable challenges during the quarter.
And management responded promptly to these challenges.
Speaker 4: At the beginning of the quarter, our offices and warehouse in Compton, California, experienced an overhead water main leak, which damaged most of the office area.
At the beginning of the quarter, our offices and warehouse in Compton, California experienced an overhead water main lake, which damaged most of the office area.
There was only minor damage to the warehouse.
Speaker 4: There was only minor damage to the warehouse, which allowed us to continue shipping, but much of the office, and particularly the design area, were unable to work from the office for several weeks.
Which allowed us to continue shifting but much of the office and particularly the design area one able to work from the office for several weeks.
This was following the impact of Hurricane IATA, which did considerable damages to our Gonzales, Louisiana office. So the past few months have not been kind to us from a water sample.
Speaker 4: This was following the impact of Hurricane Ida, which did considerable damages to our Gonzales, Louisiana office.
Speaker 4: So the past few months have not been kind to us from a water standpoint.
Speaker 4: along with many US companies, we continue to experience increase in costs of our product as well as delays and extra costs associated with importing goods from Asia.
Along with many U S companies, we continued to experience inquiries and cost of our product as well as delays in extra costs associated with importing goods from Asia.
We have passed along some of these increases increased cost to our customers whenever we can.
Speaker 4: We have passed along some of these increases, increased costs to our customers whenever we can.
We have experienced labor shortages and higher turnover in the warehouse operations during the past few quarters.
Speaker 4: We have experienced labor shortages and higher turnover in the warehouse operations during the past few quarters.
This has become worse since the.
Speaker 4: recently due to the increase in COVID cases that we've experienced in comp.
Recent recently due to the increase in Covid cases.
Appearance and Compton.
Speaker 4: Our board of directors declared a quarterly cash dividend of eight cents per share yesterday, which was announced this morning to be paid on April the 8th, 2022.
Our board of directors declared a quarterly cash dividend of <unk> per share yesterday, which was announced this morning to be paid on April eight 2022 to shareholders of record as of the close of business on March 18th.
Speaker 4: to shareholders of record as of the close of business on March the 18th, 2022. Before I turn the call over to Olivia Craig, I'd like to congratulate Olivia Elliott on her recent promotion announced this morning to CEO effective March 1st.
2020.
Yes.
Before I turn the call over to Olivia and Craig I'd like to congratulate Olivia Elliott on her recent promotion announced this morning.
CEO effective March one.
Speaker 4: I have worked with Olivia for more than 20 years and believe her contributions during that time make her the right person to lead the company into the future. Olivia, congratulations.
I've worked with Olivia for more than 20 years and believe her contributions during that time make her the right person to lead the company into the future Olivia congratulations thank you.
Speaker 4: Now I turn the call over to Olivia and then she will turn it back to Craig. We'll give them a call to the financials. Thanks.
Now I'll turn the call over to Olivia and then she'll turn it back to Craig.
We'll give more color.
Financials. Thank you.
Speaker 5: Thank you, Randall. I'm really excited to have the opportunity to continue to work with our outstanding team and I look forward to a bright future for the future.
Thank you Randall I'm really excited to have the opportunity to continue to work with our outstanding team and I look forward to a bright future for the company.
Speaker 5: I'm going to touch on the third quarter results at a very high level, then I'll turn the call over to Craig to go into more detail.
I'm going to touch on the third quarter results at a very high level, then I'll turn the call over to Craig to go into more detail.
Speaker 5: Third quarter net sales were $22.7 million compared with $19.5 million last year.
Third quarter net sales were $22 7 million compared with $19 5 million last year Carousel design didn't affect the current quarter, but for the prior year quarter. If you exclude carousel, which ceased operations in May 2021, net sales for last year would have been $18 4 million, which represents an inquiry.
Speaker 5: Carousel designs didn't affect the current quarter, but for the prior year quarter, if you exclude Carousel, which ceased operations in May 2021, net sales for last year would have been $18.4 million, which represents an increase of 23.8% for No-Joe and FAFSA.
<unk> was 23, 8% for Newco and sassy.
Speaker 5: Netshield for the first nine months of fiscal year 2022 were 61.7 million compared with 57.3 million.
Net sales for the first nine months of fiscal year 2022 were 61 7 million compared with $57 3 million last year.
Speaker 5: If you exclude carousel from both years, net sales for the current year-to-date period would have been $61 million compared with $53.2 million last year, which represents an increase of 14.6% for no-joe-and-fast.
Look here itself from both years net sales for the current year to date period would have been $61 million compared with $53 2 million last year, which represents an increase of 14, 6% for newco and sassy.
Speaker 5: Internet-based sales represented more than 25% of our current year sales, and we also continue to see higher international sales this year, with those sales representing almost 5% of year-to-date sales.
Internet based sales represented more than 25% of our current year sales and we also continue to see higher international sales. This year with those sales representing almost 5% of year to date sales.
Speaker 5: Third quarter net income was $2.4 million compared with $2.1 million last year.
Third quarter net income was $2 4 million compared to $2 1 million last year. Once again carousel did not affect the current year quarter and when you exclude the impact of carousel from the prior year quarter net income would have been $2 2 million last year or 22 cents per diluted share compared with 24 cents.
Speaker 5: Once again, carousel did not affect the current year quarter, and when you exclude the impact of carousel from the prior year quarter, net income would have been $2.2 million last year, or 22 cents per diluted share, compared with 24 cents this year.
This year.
Speaker 5: Net income for the first nine months of fiscal year 2022 was $7.5 million compared with $5.8 million last year.
Net income for the first nine months of fiscal year, 2022, with $7 5 million compared with $5 8 million last year. When you exclude the impact of the forgiveness of the Paycheck protection program loan from the current year and Carousel from both years net income for the nine months period at the current year would've been $6 3 million or <unk> 63.
Speaker 5: When you exclude the impact of the forgiveness of the Paycheck Protection Program loan from the current year and carousel from both years, net income for the nine-month period of the current year would have been $6.3 million or $0.63 per diluted share, compared with $5.9 million or $0.58 for diluted share last year.
<unk> per diluted share compared with $5 9 million or <unk> 58 cents per diluted share last year.
Speaker 5: As Randall mentioned, we continue to feel the impact of rising product and freight costs, which impacted our growth margin this year.
As Randall mentioned, we continue to feel the impact of rising product and freight costs, which impacted our gross margin this quarter.
Speaker 5: On the balance sheet side, we finished the quarter with $2.1 million in cash and no debt. Overall, it's been a very good quarter for us.
On the balance sheet side, we finished the quarter with $2 1 million in cash and no debt overall, it's been a very good quarter for us.
Now I'll turn it over to Craig.
Speaker 3: Thanks, Olivia. I'll only give financial highlights. For a more detailed analysis, please refer to the company's Form 10-Q filed with the FCC this morning.
Thanks Olivia.
I don't want to give financial highlights for a more detailed analysis. Please refer to the company's Form 10-Q filed with the SEC. This morning.
Speaker 3: As Olivia mentioned, net sales were $22.7 million for the third quarter of fiscal 2022, compared with $19.5 million for the third quarter of the prior year, an increase of 3.3 million or 16.8%.
As Olivier mentioned net sales were $22 7 million for the third quarter of fiscal 2022, compared with $19 5 million for the third quarter of the prior year, an increase of $3 3 million or 16, 8%.
Speaker 3: Sales of bedding, blankets, and accessories increased by $349,000, which is net of a decrease of $1.1 million due to the closure of carousel.
Sales of bedding blankets and accessories increased by 349000, which is net of a decrease of $1 $1 million due to the closure of carousel.
Speaker 3: Sales of bibs, toys, and disposables increased by 2.9 million over the same period.
Sales of Bibs toys, and disposables increased by $2 9 million over the same period.
Speaker 3: Net sales were $61.7 million for the first nine months of fiscal 2022, compared with $57.3 million for the same period of the prior year, an increase of $4.3 million or 7.6%.
Net sales were $61 7 million for the first nine months of fiscal 2022, compared with $57 3 million for the same period of the prior year, an increase of $4 3 million or seven 6%.
The increase in sales was primarily due to $6 million higher sales or bids toys and disposables, partially offset by a decrease of $1 7 million in sales of bedding and blankets, including a decrease of $3 5 million due to the closure of carousel.
Speaker 3: The increase in sales is primarily due to $6 million higher sales of bids, toys, and disposables partially offset by a decrease of $1.7 million in sales of bedding and blankets.
Speaker 3: including a decrease of 3.5 million due to the closure of Carisone.
Speaker 3: The increases in sales during the comparable three and nine month periods are partially due to a strong new modular set and higher replenishment orders at a major retailer and are somewhat offset by declines in sales to online retailers as consumers have begun to return to store.
The increases in sales during the comparable three and nine months periods are partially due to our strong new modular set and higher replenishment orders at a major retailer and are somewhat offset by declines in sales to online retailers as consumers have begun to return to stores.
Speaker 3: Gross profit increased slightly in amount but decreased from 31.6% of net sales in the prior year quarter to 27.1% of net sales in the current year quarter.
Gross profit increased slightly in amount, but decreased from 31, 6% of net sales in the prior year quarter to 27, 1% of net sales in the current year quarter.
Speaker 3: The increase in the gross profit amount is net of the effect of the closure of carousel, which recognized the gross profit of $319,000 in the prior year quarter.
The increase in the gross profit amount is net of the effect of the closure of carousel, which recognized a gross profit of 319000 in the prior year quarter.
Speaker 3: Gross profit decreased from $1.4 million and decreased from 31.9% of net sales for the prior year nine month period to 27.4% of net sales for the same period in the current year.
Gross profit decreased from $1 4 million and decreased from 31, 9% of net sales for the prior year nine month period to 27, 4% of net sales for the same period in the current year.
Speaker 3: The closure of carousel resulted in a 2.2 million decrease in gross profit, which in the current year, nine month period included the sale of inventory below cost and the recognition of charges of $334,000 associated with the settlement with a supplier of a commitment to purchase fabric and 265,000 associated with the liquidation of carousels remaining inventory upon the closure of the business.
Closure of Carousel resulted in a $2 2 million decrease in gross profit, which in the current year nine month period included the sale of inventory below cost and the recognition of charges of $334000 associated with the settlement with a supplier of a commitment to purchase fabric and 200.
65000 associated with the liquidation of care ourselves remaining inventory upon the closure of the business.
The company's gross profit has also been adversely impacted in both the three and nine month periods of the current year by continuing increases in cost across the entire supply chain.
Speaker 3: The company's gross profit has also been adversely impacted in both the three and nine month periods of the current year by continuing increases in costs across the entire supply chain.
Speaker 3: Marketing and administrative expenses decreased by $326,000 and decreased from 17.6% of net sales in the prior year quarter to 13.6% of net sales in the current year quarter.
Marketing and administrative expenses decreased by 326000 and decreased from 17, 6% of net sales in the prior year quarter to 13, 6% of net sales in the current year quarter.
Speaker 3: Marketing and administrative expenses decreased by 978,000 and decreased from 18.5% of net sales for the prior year, nine-month period to 15.6% of net sales for the same period in the current year.
Marketing and administrative expenses decreased by 978000 and decreased from 18, 5% of net sales for the prior year nine month period to 15, 6% of net sales for the same period in the current year.
Speaker 3: The decrease in amounts for the current year periods include lower charges incurred by carousel of $494,000 for the three month period and $1.3 million for the nine month period.
The decrease in amounts for the current year periods include lower charges incurred by Carousel of 494000 for the three months period, and $1 3 million for the nine month period.
Speaker 3: Other items in the nine month period ended December 26, 2021, include a $1.985 million gain from the forgiveness of the PPP loan.
Other items in the nine months period ended December 26, 2021 include a one $985 million gain from the forgiveness of the PPP loan.
Speaker 3: The current year-to-date provision for income taxes is based upon an estimated annual effective tax rate from continuing operations of 20 percent compared with 23.7 percent in the prior year.
The current year to date provision for income taxes is based upon an estimated annual effective tax rate from continuing operations of 20% compared with 23, 7% in the prior year.
Speaker 3: The current year-to-date provision includes no tax expense from the gain on extinguishment of debt, which will be permitted to be excluded from taxable income, the effect of which lowers the effective tax rate for fiscal year 2022 by approximately 4 percentage points.
The current year to date provision includes no tax expense from the gain on extinguishment of debt, which will be permitted to be excluded from taxable income the effective which lowers the effective tax rate for fiscal year 2022 by approximately four percentage points.
Speaker 3: During the current and prior year 9 month period, the company recorded discrete reserves for unrecognized tax liabilities, as well as entries associated with excess tax benefits or shortfalls arising from the vesting of non-vested stock and the exercise of stock options.
During the current and prior year nine month period, the company recorded discrete reserves for unrecognized tax liabilities as well as entries associated with excess tax benefits or shortfalls arising from divesting of non vested stock and the exercise of stock options.
Speaker 3: The effective tax rate from continuing operations combined with the effect of the discrete income tax items resulted in an overall provision for income taxes of 19.4% for the current year-to-date period and 23.7% for the prior year.
The effective tax rate from continuing operations combined with the effect of the discrete income tax items resulted in an overall provision for income taxes of 19, 4% for the current year to date period and 23, 7% for the prior year.
Speaker 3: Net income for the third quarter of fiscal 2022 was 2.4 million or 24 cents per deluded share. Compared to net income of 2.1 million or 21 cents per deluded share for the third quarter of fiscal 2021.
Net income for the third quarter of fiscal 2022 was $2 4 million or <unk> 24 per diluted share compared to net income of $2 1 million or <unk> 21 per diluted share for the third quarter of fiscal 2021.
Speaker 3: Net income for the first nine months of fiscal 2022 was $7.5 million or $0.74 per diluted share compared to net income of $5.8 million or $0.57 per diluted share for the same period in fiscal 2021.
Net income for the first nine months of fiscal 2022 was $7 5 million or <unk> 74 per diluted share compared to net income of $5 8 million or <unk> 57 per diluted share for the same period in fiscal 2021.
I will now turn the call back over to Randy.
Speaker 4: I'll now turn the call back over to Renton. Craig Olivia, thank you very much. Gary, if you'll come back in and give the instructions for anyone interested in entering the Q&A section.
Olivia Thank you very much.
Here, if you will come back and give the instructions for anyone interested in entering the Q&A section.
We will begin.
Speaker 1: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
We will now begin the question and answer session to.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speaker phone please pick up your handset before pressing the keys.
Speaker 1: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Speaker 1: Our first question is from Linda Bolton, Wiser with DA Davidson. Please go ahead.
Our first question is from Linda Bolton Weiser with D. A Davidson. Please go ahead.
Speaker 6: Hi, thank you. This is Griffin on for Linda. So I guess my first question is, you know, can you comment a little bit more on the freight price fluctuation during the quarter? Just kind of any more color there would be great.
Alright. Thank you this is griffin on for Linda.
So I guess my first question is can you comment a little bit more on the freight price fluctuation due saw during the quarter just kind of any more color there would be great.
Speaker 5: I mean, we really haven't given any details about what kind of impact it's had, but I mean, as I'm sure you're aware, it's pretty much across the board for all companies right now that freight cost of increase, I think product cost is rising from China, both because of raw materials and their labor costs, and then just the amount of time that it's taking and the detention at the ports, et cetera, has definitely impacted growth.
I mean, we really havent, given any details about what kind of impact it had but.
As Im sure Youre aware, it's pretty it's.
It's pretty much across the board for all companies right now that freight cost have increased I think product cost is rising from China.
China, both because of raw materials and their labor costs and then just.
Out of time that it's taking in the detention at the Port et cetera has just has definitely impacted gross margin.
Speaker 6: Okay, great. And then were you able to recapture any of the retailer orders that were canceled last quarter due to the shutdown from the system but?
Okay, Great and then were you able to recapture any of the retailer orders that were canceled last quarter due to the shutdown from the system glitch.
Speaker 5: Yes, we were. We spent the entire third quarter probably halfway through, we were able to catch up with most of those waters. So yeah, you can see the impact of that in the numbs.
Yes, we are we you know we spent the entire third quarter, probably halfway through we were able to catch up with most of those orders. So yeah, you can see the impact of that in the numbers.
Speaker 6: Okay, great. And then can you kind of just say, what the labor turnover rate that you're seeing, how are you trying to mitigate this going forward?
Okay great.
And then.
Can you kind of just say, what the labor turnover rate that youre seeing.
Kind of how are you trying to mitigate those going forward.
Speaker 5: That's a tough one. So overall in California right now, I mean, it's definitely a tough labor market. We've been combating it with temps, and in a lot of cases, we end up hiring the temps. But more importantly, I think the impact has been COVID, and so we've had a lot of outages just due to people being sick. So it's definitely been tough, but we're doing our best to make sure that we are fully staffed and are able to get temp workers in there to help.
That's a tough one so.
Overall in California, right now I mean, it's definitely a tough labor market.
We've been combating it with Tims and you know in a lot of cases, we end up hiring the Tam.
But more importantly, I think the impact has been COVID-19 until we've had a lot of outages just due to people.
Being sick so.
It's definitely been tough, but we're doing our best to make sure that we are fully staffed and are able to get temp workers in there to help us.
Speaker 5: while we have those outages.
While we have those outages.
Alright.
Speaker 6: And then can you talk about what kind of occurrence they did to the consumer in your industry compared to historical levels of demand?
And then can you talk about kind of the current state of the consumer in your industry compared to kind of historical levels of demand.
You know.
Speaker 5: The consumer demand is largely based on and our industry on designs and we continue to have great designs and product development coming from the company. So we feel like our products are still popular. It's definitely a little bit different in that we're talking more to the consumer. There's social media, online sales. There's been a good switch to online sales.
The consumer demand is largely.
Based on in our industry on designs and we continue to have great designs and product development coming from the company. So we feel like our products are still popular.
Definitely a little bit different in that.
We're talking more to the consumer their social media.
Online sales you know there's been a good switch to online sales. So it's kind of dialed back a little bit because last year. During COVID-19 that was the primary source of sales, we're seeing some movement back to brick and mortar, but still the online sales.
Speaker 5: Though it's kind of dialed back a little bit because last year during COVID that was the primary source of sales, we're seeing some movement back to brick and mortar, but still, you know, the online sales and what the consumer sees is definitely different than it used to be in the past.
What the consumer sees is definitely different than it used to be in the past.
Speaker 6: Right. And then my last question here is for Olivia, you know, with your transition into the CEO position, can you kind of give us your initial vision for crown craft?
Great and then my last question here.
Sure Olivia.
With your transition into the CEO position can you kind of give us your initial vision for crown crafts.
Speaker 5: You know, we don't really do any forward looking.
We don't really do any forward looking.
Speaker 5: or anything like that. So that's kind of a tough one to tell you what our vision is because that would imply, you know, our strategy for the future.
Statements or anything like that so that's kind of a tough one to tell you what our vision is because that would imply our strategy for the future.
Sure Okay, well. Thank you very much appreciate it.
Speaker 1: The next question is from Justin Potnum with Kalanta Investment Group. Please go ahead.
The next question is from Justin Putnam with <unk> investment group. Please go ahead.
Speaker 7: yes good morning um... i was curious uh... excluding carousel are there any other expenses during the quarter that you would characterize is you know unusual or or or or non-recurring
Yes, good morning.
I was curious excluding carousel are there any other expenses during the quarter that you would characterize.
No unusual or nonrecurring.
Speaker 5: No, other than Caricell nothing in this order. We had the forgiveness of the paycheck protection loan in the first quarter, but that obviously wasn't.
No other than carousel nothing in this quarter, we had the.
The forgiveness of the paycheck protection loan in the first quarter, but that obviously with it.
Speaker 5: And then otherwise it's other than the increased cost that we've talked about in the growth in the cost sales.
And then otherwise.
Other than the increased costs that we've talked about and the growth in the cost of sales there is nothing unusual.
Speaker 7: Okay, so then with Carousel, you mentioned a couple of spin items in the queue.
Okay. So then with Carousel, you mentioned a couple of expense items in the queue.
Speaker 7: inventory you had to sell blow calls and then you know supplier commitment that you had to fulfill
The inventory you had said to sell below cost and then.
Prior commitment that you had to fulfill.
Speaker 7: It looks like an acute of those numbers. I think they're an aggregate aggregate around 600,000 dollars and it looks like Maybe you're talking about those being nine month figures. Where's any of those calls in the current quarter?
Q those numbers I think they are in the aggregate aggregate around $600000 and it looks like maybe youre talking about being nine month figures.
As many of those costs in the current quarter no all of that was in the first quarter.
Speaker 7: All that was in the first floor. Okay, great. And my last question is regarding the
All of that was in the first quarter, Okay. Great and then my last question is regarding the.
Speaker 7: large orders you got from a major retailer here in the quarter. How would you characterize that order? Is that an order that's pulling forward some sales, or were they trying to replenish inventory to make up from, you know, past quarters, or how would you characterize that? And also, how material is that order?
Large order you got from a major retailer during the quarter. How would you characterize that order is that an order thats pulling forward some sales or are they trying to replenish inventory to make up from.
Past quarters, or how would you characterize that and also how material is that order.
Speaker 5: We really haven't given that number, so I'm not going to give you the number. It's probably a little bit of those. It's hard to tell what they're doing, but definitely we've experienced some shortages just because of the time it takes to get through the port. So in a big way, they were trying to replenish their shells due to outage.
We really haven't given that number so I'm not going to give you the number.
Yeah, it's probably a little bit of both it's hard to tell what they're what they're doing but definitely we've experienced some.
Shortages, just because of the time it takes to get through the port.
In a big way they were trying to replenish their shelves due to due to outages.
Speaker 7: Okay, well, is it material, is it kind of an unusual in size and scope, or is it kind of normal in what you see erotically?
Okay.
Is it material or is it in the kind of an unusual in size and scope with the kind of normal.
Yes.
Erotically.
Speaker 5: I mean, I'm going to say it's more normal than anything on an order patterns can vary. It was a bigger order than what they would normally place at that time, but we have shifts all the time.
I mean, I'm going to say, it's more normal than anything I mean order patterns can vary it was a bigger order than what they would normally place at that time, but we have ships all the time.
Speaker 7: Okay, great, that's my questions. Thank you very much.
Okay, great. Okay, great. That's my questions. Thank you very much.
Thank you.
Speaker 1: Again, if you have a question, please press star then one. The next question is from Max Bratzer with Winfield Capital. Please go ahead.
Again, if you have a question. Please press Star then one.
The next question is from Max <unk> with Winfield capital. Please go ahead.
Speaker 4: Well, my question takes the form of a comment. I'd like to congratulate you Olivia. And thank you very much.
Well my question takes the form of a comment on that.
Like to congratulate you Olivia.
You very much.
Speaker 8: for all the great work you guys have done down there.
Uh huh.
For all the great work you guys have done down there.
Speaker 8: It's the end of an era, end of the beginning of a new one, but the continuity of the management has been great. As you guys know, we've historically had been institutional holders, and I've been a person all the way for a long time. And I just wanted to say thanks a lot. That has been a great job and a very, very tough industry.
It's one of the the mirror on the beginning of a new one.
Tom.
Management has been.
Great.
You guys know historically had been.
Susan holders and I admit a person to hold them for a long time.
Just more of a managed a lot.
Done a great job.
Right.
Speaker 8: And that's all I had to say. So continue good work in science. Thank you very much. Thank you, Matt.
Sure.
Totally working swaps.
Thank you very much. Thank you Matt good to hear from.
Yeah.
Speaker 1: The next question is from Dennis Gnell with Rootabega Capital. Please go ahead.
The next question is from Dennis Scannell with Rutabaga capital. Please go ahead.
Speaker 9: Yes, good morning and I'll add my congratulations to Livia. Hey, just a couple of quick things. So on the SGA line, your operating expenses, well that's about as low that I've seen in many years and actually the, at the percent of sales.
Yes, good morning, and I'll add my congratulations to Olivia Hey, just a couple of quick things. So on the on the SG&A line. Your operating expenses well that was that's about as low that I've seen in many years and it actually the as a percent of sales.
Speaker 9: It's actually the lowest I think I've ever seen. So just kind of curious, were there any unusual addbacks? It didn't seem like Craig called out anything, but I'm just trying to clarify that. And I know this gets into forward looking statements, but kind of how do we think about this going forward? Is this a good run rate going forward? So whatever you can give me in terms of direction there would be great.
It's actually the lowest I think I've ever seen so.
Just kind of curious where there any unusual add backs it did.
It seem like Craig called out anything, but I'm, just trying to clarify that and I know this gets into a forward looking statement, but kind of how do we think about this going forward is this a is this a good run rate going forward. So whatever you can give me in terms of direction there would be great.
Speaker 5: So it's two things. For the most part, G&A or fixed cost, I mean, you have a little bit of commissions in there, but that's pretty much a low number. So as sales go higher, you're gonna see that percentage go down. Also, carousel, a lot of their costs were in the advertising, which was a selling cost. And so without carousel, you see the advertising cost going down a good bit.
So it's two things.
For the most part G&A, our fixed cost I mean, you have a little bit of <unk>.
Commissions in there, but that's pretty much a low number so as sales go higher you're going to see that percentage go down.
Also carousel a lot of their costs were in the advertising, which was the selling costs and so without without curious how you see the advertising costs going down a good bit.
Speaker 9: Great, thank you. And then the retail order that was larger than normal, at least for that in the most recent quarter, was that all on the bedding side?
Okay got it great. Thank you.
And then so and then the.
Retail order that was larger than normal at least for that for the most recent quarter.
Oh on the bedding side.
Speaker 9: Actually, no, it was along the bit side. Okay, great, great. And, you know, it's...
Actually no it was along the bedside, okay great great.
And you know.
<unk>.
Speaker 9: You know, obviously since your fiscal 2016, we've seen, you know, real struggles on the bed inside of your business.
Obviously since your fiscal 2016, we've seen real real struggles on the bedding side of your business you know after the pediatricians came out against it came.
Speaker 9: after the pediatricians came out against, or it came proposed or encouraged folks to do the naked bed thing and so on. But we see some really nice momentum in that segment. Is that, can you talk a little bit about that? Do you think you're getting chair? Is there, you think there is more momentum kind of on that side of the bed?
Propose or encourage folks to do that and make a bad thing and so on but we've seen some really nice momentum in that in that segment is that.
Can you talk a little bit about that do you think youre gaining share is there.
Okay.
Do you think there is more momentum kind of on that side of the business.
Speaker 5: So I won't answer that is there more momentum, but yes, we actually have done very well in gaining a little bit of market share. Our designs there have really gotten
So I want to answer that is there more momentum, but yes, we actually have done very well in gaining a little bit of market share our designs there has really.
Speaker 5: A lot of traction and we've also decided to kind of expand some of our other kind of into adjacent categories a lot with the decor and the accessories because obviously if you're not going to have the bumpers and things like that and the crib anymore our goal is to pretty much decorate the entire nursery. So we've looked at what other items we can add into the mix in order to gain more shape.
A lot of traction and we've also decided to kind of expand some of our other kind of into adjacent categories, a lot with the decor and the accessories.
Cause obviously, if youre not going to have the bumpers and things like that in the crib anymore. Our goal is to pretty much decorate the entire nursery said, we've looked at what what other items, we can add into the mix in order to gain more share.
Speaker 9: Got it, excellent. Well, it's nice to see the sales moving in the right direction there. And then finally, in the quarter, were there any loss sales due to inability to get product, you know, information and to your customers or is your fulfillment kind of where you would hope to be recognizing that, you know, there may be some delays and lead times a longer, but you're still filling what you can.
Got it excellent well, it's nice to see the sales moving in the right direction there.
And then finally.
In the quarter were there any lost sales due to.
Inability to get product in.
From Asia and into your customers or.
Is your fulfillment kind of where you would hope to be recognizing that there may be some delays and lead times are longer but youre still filling what what what you can.
Speaker 5: We're still filling what we can. I mean, there are some delays, but as soon as we can get the product in, it's going right back to the other door, and we're doing our best just to keep up with the momentum. Okay, great.
We're still fill in what we can I mean, there are some delays, but as soon as we can get the product and its going right back to the other the other door and we're doing our best just to keep up with the momentum.
Okay, great. Thank you very much and good luck.
Thank you.
Speaker 1: This concludes our question and answer session. I would like to turn to the conference back over to Randall Chessnaf for any closing remarks.
This concludes our question and answer session I would like to turn the conference back over to Randall chestnut for any closing remarks.
Speaker 4: All right, Gary. Thank you very much and thanks to everyone on the call. We're extremely proud of the results for the third quarter of FY22. Management's done an outstanding job working through all the challenges and posting very good results. We'd like to thank everyone for their continued support and interest in the company and special thanks to all employees, suppliers and of course customers.
All right Gary Thank you very much and thanks to everyone on the call. We're extremely proud of the results for the third quarter of FY 'twenty. Two management has done an outstanding job working through all the challenges and posting very good results wed like to thank everyone for their continued support.
Interest in the company and a special thanks to all employees suppliers and of course customers.
Speaker 4: Management looks forward to talking with you again in mid-June.
Management looks forward to talking with you again in mid June .
Speaker 4: When we release the fourth quarter and four year physical 2022 results. Thank you very much and with that it concludes our conference today. Have a good day. Thank you.
When we released our fourth quarter and full year physical 2022 results. Thank you very much and with that it concludes our conference today and have a good day. Thank you.
Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
France has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 2: Sometime.
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