Q4 2026 Crown Crafts Inc Earnings Call

June 24, 2026

Speaker #1: Greetings, and welcome to the Crown Crafts Fiscal Fourth Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings, welcome to the Crown Crafts Fiscal Q4 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Olivia Elliott, Chief Executive Officer. Please go ahead.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: I'd now like to turn the conference over to your host, Olivia Elliott, Chief Executive Officer. Please go ahead.

Speaker #2: Thank you, operator, and welcome everyone to this morning's call. We're glad you could join us. We generated solid quarterly results in an operating environment that continues to be challenging.

Olivia Elliott: Thank you, operator, welcome everyone to this morning's call. We're glad you can join us. We generated solid quarterly results in an operating environment that continues to be challenging. This reflects the strength of our business model, the broad appeal of our brands, and of course, the hard work of our dedicated team. Despite global conflicts, fluctuating tariffs, higher gas prices, and consistently high inflation weighing on the American consumer, we were able to hold net sales almost flat with the prior year at $22 million, bringing our full-year net sales to more than $80 million. In addition, our gross margin improved to nearly 23% during the Q4, up 460 basis points versus the prior year period. The result was positive net income for the quarter and operating cash flow of more than $8 million for the fiscal year.

Speaker #2: This reflects the strength of our business model, the broad appeal of our brands, and, of course, the hard work of our dedicated team. Despite global conflicts, fluctuating tariffs, higher gas prices, and consistently high inflation weighing on the American consumer, we were able to hold net sales almost flat with the prior year at $22 million, bringing our full-year net sales to more than $80 million.

Speaker #2: In addition, our gross margin improved to nearly 23% during the fourth quarter, up 460 basis points. The result was positive net income for the quarter and operating cash flow of more than $8 million for the fiscal year.

Speaker #2: An exciting fourth-quarter highlight was our February announcement of the relaunch of Manhattan Toy's Groovy Girls, which we kicked off at the North American International Toy Fair following a ceremonial ringing of the closing bell at NASDAQ.

Olivia Elliott: An exciting Q4 highlight was our February announcement of the relaunch of Manhattan Toy Groovy Girls, which we kicked off at the North American International Toy Fair following a ceremonial ringing of the closing bell at Nasdaq. This iconic collection of soft fashion dolls has already been met with a strong reception since its official rollout to specialty retailers just last month and is perfectly timed to tap into today's retro-inspired consumer market. We're excited about the potential for this beloved brand and other opportunities as we continue to focus on innovative internal product development to expand our product offerings. In addition to driving revenue growth, another priority of ours is margin expansion and the resulting bottom-line growth.

Speaker #2: This iconic collection of soft fashion dolls has already been met with a strong reception since its official rollout to specialty retailers just last month.

Speaker #2: And it's perfectly timed to tap into today's retro-inspired consumer market. We're excited about the potential for this beloved brand and other opportunities as we continue to focus on innovative internal product development to expand our product offerings.

Speaker #2: In addition to driving revenue growth, another priority of ours is margin expansion and the resulting bottom-line growth. We believe our gross margin of 22.9% for the quarter, while improved over the prior year's results, has further room to expand as we grow sales, improve operating leverage, and continue our spending discipline.

Olivia Elliott: We believe our gross margin of 22.9% for the quarter, while improved over the prior year's results, has further room to expand as we grow sales, improve operating leverage, and continue our spending discipline. This includes our continued efforts to execute on cost initiatives with our previously communicated plans to consolidate certain internal operations to eliminate redundant activities and create a leaner operating structure. Turning to our balance sheet and capital allocation, which Claire will provide further details on in a moment. As I mentioned, we generated more than $8 million of operating cash flow during fiscal 2026, despite the soft operating environment, we continue to have sufficient liquidity to support our growth plans.

Speaker #2: This includes our continued efforts to execute on cost initiatives with our previously communicated plans to consolidate certain internal operations to eliminate redundant activities and create a leaner operating structure.

Speaker #2: Turning to our balance sheet and capital allocation, which Claire will provide further details on in a moment, as I mentioned, we generated more than $8 million of operating cash flow during fiscal 2026, despite the soft operating environment.

Speaker #2: And we continue to have sufficient liquidity to support our growth plans. Our capital allocation strategy is well balanced, and during the fourth quarter, we paid our regular dividend while continuing to invest in internal product development and marketing efforts to grow our market share over time.

Olivia Elliott: Our capital allocation strategy is well-balanced. During the Q4, we paid our regular dividend while continuing to invest in internal product development and marketing efforts to grow our market share over time. In closing, Crown Crafts is executing effectively. We're focused on driving our long-term growth opportunities while managing inventories, tightly controlling costs, and strategically allocating capital toward growth initiatives, as well as returning capital to our loyal shareholders. Looking ahead, our foundation for success includes our strong brands and licenses, our valued retail and licensing partners, our solid balance sheet, of course, the talented people who drive our success each day and will ultimately help us create meaningful shareholder value over time as a leading producer of infant, toddler, and juvenile consumer products. With that, I'll turn it over to Claire to take us through additional financial details on our quarterly results.

Speaker #2: In closing, Crown Crafts is executing effectively. We're focused on driving our long-term growth opportunities while managing inventories, tightly controlling costs, and strategically allocating capital toward growth initiatives.

Speaker #2: As well as returning capital to our loyal shareholders. Looking ahead, our foundation for success includes our strong brands and licenses, our valued retail and licensing partners, our solid balance sheet, and, of course, the talented people who drive our success each day and will ultimately help us create meaningful shareholder value over time as a leading producer of infant toddler and juvenile consumer products.

Speaker #2: With that, I'll turn it over to Claire to take us through additional financial details on our quarterly results.

Speaker #3: Thank you, Olivia, and thanks, everyone, for being with us today. For the fourth quarter of our fiscal year, we generated net sales of $22.4 million despite continued softness in consumer spending.

Claire Spencer: Thank you, Olivia. Thanks, everyone, for being with us today. For the Q4 of our fiscal year, we generated net sales of $22.4 million, despite continued softness in consumer spending, which compares to $23.2 million in the year-ago Q4. Our gross profit of $5.1 million represented a 22.9% margin, which was up from 18.3% in the Q4 of 2025. As Olivia mentioned, this 460 basis point improvement was driven by our strategic pricing initiatives and more favorable mix of higher margin products. We were able to hold marketing and administrative expense almost entirely flat versus the prior year quarter at $4.6 million, despite continued inflationary dynamics.

Speaker #3: Which compares to 23.2 million in the year ago fourth quarter. Our gross profit of $5.1 million represented a 22.9% margin which was up from 18.3% in the fourth quarter of 2025.

Speaker #3: As Olivia mentioned, this 460 basis point improvement was driven by our strategic pricing initiatives and a more favorable mix of higher-margin products. We were able to hold marketing and administrative expense almost entirely flat versus the prior year quarter at $4.6 million, despite continued inflationary dynamics.

Speaker #3: We were also able to reduce interest expense at $194,000 for the fourth quarter of 2026 compared to $333,000 a year earlier, benefiting from a sizable reduction in debt.

Claire Spencer: We were also able to reduce interest expense at $194,000 for the Q4 of 2026 compared to $333,000 a year earlier, benefiting from a sizable reduction in debt. The bottom line result was +net income for the quarter of $280,000, which improved from a loss of approximately $11 million the prior year Q4 due to a non-cash goodwill impairment charge in the year-ago period. Our basic and diluted earnings per share were $0.03, up from a loss of $1.04 per share the prior year. Moving on to our balance sheet. We ended the fiscal year with total assets of $70.7 million. Inventories were $28.4 million as of 29 March, up slightly from $27.8 million at the end of fiscal 2025.

Speaker #3: The bottom-line result was positive net income for the quarter of $280,000, which improved from a loss of approximately $11 million in the prior year's fourth quarter due to a non-cash goodwill impairment charge in the year-ago period.

Speaker #3: Our basic and diluted earnings per share were $0.03, up from a loss of $1.04 per share the prior year. Moving on to our balance sheet, we ended the fiscal year with total assets of $70.7 million. Inventories were $28.4 million as of March 29th, up slightly from $27.8 million at the end of fiscal 2025.

Speaker #3: Our total debt balance was $14.1 million a year-end, a reduction from $18.5 million at the end of fiscal 2025. And we had $12.5 million of undrawn availability on our revolving credit facility.

Claire Spencer: Our total debt balance was $14.1 million at year-end, a reduction from $18.5 million at the end of fiscal 2025, and we had $12.5 million of undrawn availability on our revolving credit facility. Lastly, as Olivia referenced, our net cash from operating activities was $8.3 million for the fiscal year, further supporting our solid financial foundation and the execution of our business plan. Wrapping up, we executed well during the Q4 of the fiscal year despite a less than robust macro environment, as we were able to significantly improve our gross margin versus the year-ago quarter. We have the necessary competitive advantages, strategic plan, and financial strength for our skilled team members to continue their efforts day in and day out, grow the business, and enhance profitability as we move into fiscal year 2027.

Speaker #3: Lastly, as Olivia referenced, our net cash from operating activities was $8.3 million for the fiscal year, further supporting our solid financial foundation and the execution of our business plan.

Speaker #3: Wrapping up, we executed well during the final quarter of the fiscal year, despite a less-than-robust macro environment, as we were able to significantly improve our gross margin versus the year-ago quarter.

Speaker #3: We had the necessary competitive advantages, strategic plan, and financial strength for our skilled team members to continue their efforts day in and day out, grow the business, and enhance profitability as we move into fiscal year 2027.

Speaker #3: With that, operator, Olivia and I would be happy to take questions if you could please open the lines.

Claire Spencer: With that operator, Olivia and I would be happy to take questions if you could please open the lines.

Speaker #4: Thank you. If you’d like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Ethan Calder with Mountain Equities. Please proceed with your question.

Speaker #4: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #4: Our first question comes from the line of Ethan Calder with Mountain Equities. Please proceed with your question.

Speaker #5: Well, good morning. Thank you for taking my call, and it sounds like a great quarter and a great performance. I just wanted to ask, regarding relationships with Walmart or Target and anyone else, if you could tell us how that stands and if you're pursuing other relationships.

Ethan Calder: Well, good morning. Thank you for taking my call. Sounds like a great quarter and a great performance. I just wanted to ask regarding generally relationships with Walmart or Target and anyone else. If you could tell us how that stands, if you're pursuing other relationships and if you can just give us some information on that. Thank you.

Speaker #5: And if you can just give us some information on that, thank you.

Speaker #2: Sure. You know, our relationships with Walmart and Target remain good. We have multiple salespeople that talk to them regularly. I meet with people at trade shows as well.

Olivia Elliott: Sure. You know, our relationships with Walmart and Target remain good. We have multiple salespeople that talk to them regularly. I meet with people at trade shows as well. As always, we're always searching for other retail partners. I mean, we've got plenty of mass retailers, specialty stores, focusing a little bit on some international sales. There's not as many out there that are as big as Walmart, Target, and Amazon for sure. You know, we look for new opportunities all the time.

Speaker #2: And as always, we're searching for other retail partners. I mean, we've got plenty of mass retailers and specialty stores, and we're focusing a little bit on some international sales.

Speaker #2: There aren't as many out there that are as big as Walmart, Target, and Amazon, for sure. But we look for new opportunities all the time.

Speaker #5: Okay. Thank you very much.

Ethan Calder: Okay. Thank you very much.

Speaker #2: Thank you.

Olivia Elliott: Thank you.

Operator: Thank you. If you'd like to join the question queue, please press *one on your telephone keypad. Our next question comes from the line of Doug Ruth with Lenox Financial Services. Please proceed with your question.

Operator: Thank you. If you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Doug Ruth with Lenox Financial Services. Please proceed with your question.

Speaker #4: Thank you. If you’d like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of Doug Ruth with Lenox Financial Services.

Speaker #4: Please proceed with your question.

Speaker #1: Olivia and Claire, I want to congratulate you. I thought you did a fabulous job. It's a really strong report, and thank you for what you're doing on behalf of the shareholders.

Douglas Ruth: Olivia and Claire, I want to congratulate you. I thought you did a fabulous job. It's a really strong report. Thank you for what you're doing on behalf of the shareholders.

Doug Ruth: Olivia and Claire, I want to congratulate you. I thought you did a fabulous job. It's a really strong report. Thank you for what you're doing on behalf of the shareholders.

Speaker #2: Thank you, Doug.

Olivia Elliott: Thank you, Doug.

Speaker #1: Could you give us some more commentary on what you're thinking about Groovy Girls? Is there is the higher inventory possibly a reflection of inventory to support that rollout?

Douglas Ruth: Could you give us some more commentary on what you're thinking about Groovy Girls? Is the higher inventory possibly a reflection of inventory to support that rollout?

Doug Ruth: Could you give us some more commentary on what you're thinking about Groovy Girls? Is the higher inventory possibly a reflection of inventory to support that rollout?

Speaker #2: There is some inventory that is at year-end for Groovy Girls. Probably the majority of the higher inventory is just the capitalization of the tariffs into the inventory cost, which obviously increased the value of the inventory over the fiscal year.

Olivia Elliott: There is some inventory that is at year-end for Groovy Girls. Probably the majority of the higher inventory is just the capitalization of the tariffs into the inventory cost, which obviously increased the value of the inventory over the fiscal year. As far as Groovy Girls, when you're saying what we're thinking about Groovy Girls, were you just asking about inventory or more in general?

Speaker #2: And then as far as Groovy Girls, when you're saying what we're thinking about Groovy Girls, were you just asking about inventory or more in general?

Speaker #1: Well, more in general, what can you tell us about sales and also the way you're selling the product? I think you're using some newer methods.

Douglas Ruth: Well, more in general, what can you tell us about sales and also the way you're selling the product? I think you're using some newer methods. Maybe you could share a little bit about that.

Doug Ruth: Well, more in general, what can you tell us about sales and also the way you're selling the product? I think you're using some newer methods. Maybe you could share a little bit about that.

Speaker #1: Maybe you could share a little bit about that.

Speaker #2: So, right now, we rolled out sales to the specialty stores beginning May 1st, and that's when we started shipping to the specialty stores.

Olivia Elliott: Right now, we rolled out sales to the specialty stores beginning 1 May, and so that's when we started shipping to the specialty stores, so it probably didn't set in the stores until later in the month. That is really, I mean, both specialty stores in the US and then through our distributor into Canada, which those sales haven't even set in Canada yet. Then we plan to roll out in the fall at Amazon, and then also internationally, when we go to the K&J trade show in September. Right now it's only at specialty stores, and we're very happy with the sales so far. I think we didn't have a lot in our budget for fiscal 2027, but we're happy with where we are so far.

Speaker #2: So it probably didn't set in the stores until later in the month. And that is really, I mean, both specialty stores in the U.S. and then through our distributor into Canada, which, those sales haven't even set in Canada yet.

Speaker #2: And then we plan to roll out in the fall at Amazon. And then also internationally. When we go to the K&J trade show in September.

Speaker #2: So right now, it's only at specialty stores, and we're very happy with the sales so far. I think we didn't have a lot in our budget for fiscal '27, but we're happy with where we are so far.

Douglas Ruth: Then in the fall, Amazon will have basically the whole offering of whatever you're selling for Groovy Girls.

Speaker #1: And then in the fall, Amazon will have basically the full offering of whatever you're selling for Groovy Girls.

Doug Ruth: Then in the fall, Amazon will have basically the whole offering of whatever you're selling for Groovy Girls.

Speaker #2: Correct. Correct.

Olivia Elliott: Correct.

Douglas Ruth: Okay.

Doug Ruth: Okay.

Olivia Elliott: Correct.

Speaker #1: Okay, that sounds terrific. And I know in the past, part of the real big success with Groovy Girls was the relationship you had with Target.

Douglas Ruth: That sounds terrific. I know in the past, part of the real big success with Groovy Girls was the relationship you had with Target. Is that something that you're also thinking about?

Doug Ruth: That sounds terrific. I know in the past, part of the real big success with Groovy Girls was the relationship you had with Target. Is that something that you're also thinking about?

Speaker #1: Is that something that you're also thinking about?

Speaker #2: At this point in time, we're not talking about rolling out Groovy Girls into mass. That's possibly an opportunity for the future, but we've probably changed the product a little bit.

Olivia Elliott: At this point in time, we are not talking about rolling out Groovy Girls into mass. That's possibly an opportunity for the future, but we've probably changed the product a little bit so that we're not selling the same exact product into mass as we are into specialty.

Speaker #2: So that we're not selling the exact same product into mass as we are into specialty.

Speaker #1: Okay. And what can you tell us about the tariffs? Are you expecting a tariff refund? Have you received a tariff refund?

Douglas Ruth: Okay. What can you tell us about the tariffs? Are you expecting a tariff refund? Have you received a tariff refund?

Doug Ruth: Okay. What can you tell us about the tariffs? Are you expecting a tariff refund? Have you received a tariff refund?

Speaker #2: So we have applied for the tariff refunds. As of two weeks ago, I think is the number we put in the 10-K, we had received about $175,000 back, of which I think $165,000 was actually tariffs and maybe 10,000 was interest.

Olivia Elliott: We have applied for the tariff refunds. As of two weeks ago, I think is the number we put in the 10-K, we had received about $175,000 back, of which I think $165 was actually tariffs and maybe $10 was interest. It was about a $5.5 million number that we requested, we're hopeful. Anything can happen, but we have received some, we're hoping that we will receive what we requested.

Speaker #2: It was about a 5.5 million dollar number that we requested. And we're hopeful. You know, anything can happen, but we have received some. And so we're hoping that we will receive what we requested.

Speaker #1: Very good. And then what is the status now? I know that the Eden Valley warehouse that lease was going to expire, I believe, at the end of this month.

Douglas Ruth: Very good. What is the status now? I know that the Eden Valley warehouse, that lease is going to expire, I believe, at the end of this month. What is the company thinking? What is your strategy here?

Doug Ruth: Very good. What is the status now? I know that the Eden Valley warehouse, that lease is going to expire, I believe, at the end of this month. What is the company thinking? What is your strategy here?

Speaker #1: What is the company thinking? What is your strategy here?

Speaker #2: We extended that lease to be more around the same time as the Compton facility. And then we were going to restart looking for a new warehouse, with plans to move in the next two years, closer to the expiration of both of those leases.

Olivia Elliott: We extended that lease to be more around the same time as the Compton facility, we're going to restart looking for a new warehouse, with plans to move in the next 2 years, closer to the expiration of both of those leases.

Speaker #1: Okay. And then how about the Stella Dial? That dial, I know you had redesigned it. What can you tell us about how that has been going since the redesign?

Douglas Ruth: Okay. How about the Stella doll? That doll, I know you had redesigned it. What could you tell us about how has that been going since the redesign?

Doug Ruth: Okay. How about the Stella doll? That doll, I know you had redesigned it. What could you tell us about how has that been going since the redesign?

Speaker #2: Dial is doing well. Once again, it's mostly in specialty store, Amazon, on our own website. But Stella Sales are doing fine.

Olivia Elliott: Stella's doing well. Once again, it's mostly in specialty store, Amazon, on our own website, Stella sales are doing fine.

Speaker #1: Okay. And then I noticed that the facility, your corporate headquarters, that you had shrunk the size of that quite a bit. Could you maybe offer any kind of commentary on that when you signed the new lease?

Douglas Ruth: Okay. I noticed that the facility, the corporate headquarters, that you had shrank the size of that quite a bit. Could you maybe offer any kind of commentary on that when you signed the new lease?

Doug Ruth: Okay. I noticed that the facility, the corporate headquarters, that you had shrank the size of that quite a bit. Could you maybe offer any kind of commentary on that when you signed the new lease?

Olivia Elliott: Yeah. Our old headquarters, where we had been for almost 25 years, needed a little bit of updating. The price was going up substantially, we decided that we would move, not far down the road, to a new facility, less space. It was a new build-out, everything's fresh and new, and we're all on one floor and all together, we're enjoying that.

Speaker #2: Yeah. So, our old headquarters, where we had been for almost 25 years, needed a little bit of updating, and the price was going up substantially.

Speaker #2: So we decided that we would move not far down the road to a new facility with less space. It was a new build-out, so everything's fresh and new.

Speaker #2: And we're all on one floor and all together, so we're enjoying that.

Speaker #1: Very good. And what are you thinking about the diaper bag business now?

Douglas Ruth: Very good. What are you thinking about with the diaper bag business now?

Doug Ruth: Very good. What are you thinking about with the diaper bag business now?

Speaker #2: We're still working on diaper bags. As you know, with the tariffs, the worst impact was on the diaper bags. And then Target had taken the diaper bags direct source.

Olivia Elliott: We're still working on diaper bags. As you know, with the tariffs, the worst impact was on the diaper bags. Target had taken the diaper bags direct source. Walmart shrunk the space in half for what they were carrying. We're working right now on kind of redeveloping and thinking again about the diaper bags. We still have a little bit of placement. We have one bag at Walmart, and then we're selling on Amazon in our own warehouse.

Speaker #2: Walmart shrunk the space in half for what they were carrying. And so we're working right now on kind of redeveloping and thinking again about the diaper bags.

Speaker #2: We still have a little bit of placement. We have one SKU at Walmart, and then we're selling on Amazon from our own warehouse.

Speaker #1: Okay. And then I know that now the Manhattan Toy Minneapolis office, that lease is down to less than one year. Are you starting to think about what you might be doing with that facility?

Douglas Ruth: Okay. I know that now the Manhattan Toy Minneapolis office, that lease is down to less than one year. Are you starting to think about what you might be doing with that facility?

Doug Ruth: Okay. I know that now the Manhattan Toy Minneapolis office, that lease is down to less than one year. Are you starting to think about what you might be doing with that facility?

Speaker #2: Yes, so we're going to move out of that facility, obviously. It's way too big for what we need, and we're still kind of trying to figure out what we want to do.

Olivia Elliott: Yes. We're going to move out of that facility. Obviously, it's way too big for what we need, and we're still kind of trying to figure out what we want to do.

Speaker #1: Oh, okay. So maybe more information in the next couple of quarters—that might be reasonable, or...

Douglas Ruth: Okay. Maybe more information in the next couple quarters that might be reasonable.

Doug Ruth: Okay. Maybe more information in the next couple quarters that might be reasonable.

Speaker #2: Sure.

Olivia Elliott: Sure.

Speaker #1: Yeah, okay. And then I'm also pleased that you've been able to increase the advertising budget. Can you maybe talk about that at all?

Douglas Ruth: Yeah. Okay. I'm also pleased that you've been able to increase the advertising budget. Can you maybe talk about that at all?

Doug Ruth: Yeah. Okay. I'm also pleased that you've been able to increase the advertising budget. Can you maybe talk about that at all?

Speaker #2: Yeah. We've increased the advertising budget. We've also added a few people to our marketing team in order to build out our photography, our social media, and also advertising.

Olivia Elliott: Yeah. We've increased the advertising budget. We've also added a few people on our marketing team in order to build out our photography, our social media, also advertising, primarily on dot-coms and for our own warehouse. I mean, our own website, sorry.

Speaker #2: Primarily on dot-coms and for our own warehouse—I mean, our own website. Sorry.

Speaker #1: Okay. And have you been pleased with how that's been going?

Douglas Ruth: Okay. Have you been pleased with how that's been going?

Doug Ruth: Okay. Have you been pleased with how that's been going?

Speaker #2: Yes. I mean, we're certainly at the beginning of our marketing efforts, just expanding that. But so far, yes.

Olivia Elliott: Yes. We're certainly at the beginning of our marketing efforts, just expanding that. So far, yes.

Speaker #1: Okay, and then I also see that the international sales are growing. There's not often a lot of commentary about that. Can you tell us? I feel like that's really been successful.

Douglas Ruth: Okay. I also see that the international sales are growing. There's not often a lot of commentary about that. I feel like that's really been successful. Could you share what's working and how that's been growing?

Doug Ruth: Okay. I also see that the international sales are growing. There's not often a lot of commentary about that. I feel like that's really been successful. Could you share what's working and how that's been growing?

Speaker #1: Could you share what's working and how that's been growing?

Olivia Elliott: There's really two main efforts that I think we're seeing flow through there. One of them is that we've worked since the Manhattan Toy acquisition on consolidating the distributors for Manhattan Toy and Sassy so that we have, instead of having two distributors, or really it wasn't even two distributors in a lot of places, but Manhattan Toy was going direct to the retailers, and then Sassy was using distributors. We've consolidated those sales into all of the Sassy distributor model. That's helped. Also we changed distributors in Canada. I think that's been very successful for us. That happened not long after, probably sometime in December.

Speaker #2: So there are really two main efforts that I think we're seeing flow through there. One of them is that we've worked since the Manhattan Toy acquisition on consolidating the distributors for Manhattan Toy and Sassy, so that instead of having two distributors—or really, it was even more than two in a lot of places, because Manhattan Toy was going direct to the retailers and Sassy was using distributors.

Speaker #2: And so we've consolidated those sales into all of the Sassy distributor model. And that's helped. And then also we changed distributors in Canada and I think that's been very successful for us.

Speaker #2: That happened not long after probably sometime in December.

Speaker #1: So that made a positive difference. Yeah. Okay. Well, my last question is, I know that the new facility had opened up—the Legoland facility in Shanghai.

Douglas Ruth: That made a positive difference.

Doug Ruth: That made a positive difference.

Olivia Elliott: Yes.

Douglas Ruth: Okay. My last question is, I know that that new facility had opened up, the LEGOLAND facility in Shanghai, you had previously mentioned that the company was getting some growth with LEGOLAND. Could you just offer a little bit of commentary about LEGOLAND and what's happening for the company there?

Doug Ruth: Okay. My last question is, I know that that new facility had opened up, the LEGOLAND facility in Shanghai, you had previously mentioned that the company was getting some growth with LEGOLAND. Could you just offer a little bit of commentary about LEGOLAND and what's happening for the company there?

Speaker #1: And you had previously mentioned that the company was getting some growth with Legoland. Could you just offer a little bit of commentary about Legoland and what’s happening for the company there?

Speaker #2: Yes, we did ship to Shanghai Legoland. They opened a little bit later than we expected, so sales weren't what we had hoped they'd be for that opening.

Olivia Elliott: Yes. We did ship to Shanghai LEGOLAND. They opened a little bit later than we expected, so sales weren't what we had hoped they'd be for that opening. We did ship to them, and actually that's probably leading to part of the international sales increase as well.

Speaker #2: But we did ship to them, and actually, that's probably leading to part of the international sales increase as well.

Speaker #1: Okay, well, thank you for answering my questions, and congratulations to you and Claire and the board of directors. Thank you again for what you're doing on behalf of the shareholders.

Douglas Ruth: Okay. Well, thank you for answering my questions, and congratulations to you, Claire, and the board of directors, and thank you again for what you're doing on behalf of the shareholders.

Doug Ruth: Okay. Well, thank you for answering my questions, and congratulations to you, Claire, and the board of directors, and thank you again for what you're doing on behalf of the shareholders.

Speaker #2: Great. Thank you.

Olivia Elliott: Great. Thank you.

Speaker #3: Thank you. Our next question comes in line. Of Anthony Lebezinski with Sedotia and Company. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Anthony Labuzinski with Sidoti & Company. Please proceed with your question.

Speaker #4: Good morning, everyone, and thanks for taking the question. Certainly, nice gross margin expansion. You mentioned that part of the reason for that was the strategic pricing actions that you took.

Anthony Labuzinski: Good morning, everyone, and thanks for taking the question. Certainly nice gross margin expansion. You mentioned that part of the reason for that was the strategic pricing actions that you took. Any way you guys can quantify as far as the extent of pricing had benefited, and how do you see that going forward, whether you think that's sustainable going on an ongoing basis?

Speaker #4: Is there any way you guys can quantify the extent to which pricing has benefited you, and how do you see that going forward? Do you think that's sustainable on an ongoing basis?

Speaker #2: We really don't quantify that. But I can explain—probably the majority of it is that when we got the tariffs hit, it's a delayed time period from when you can raise your prices with the retailers.

Olivia Elliott: We really don't quantify that, but I can explain probably the majority of it is that when we got the tariff hit, it's a delayed time period from when you can raise your prices with the retailer. A lot of them have a 60 or a 90-day window. We also waited at the beginning of the fiscal year to see where the tariffs would actually land, because obviously we didn't want to go to the retailer and say, Hey, we're raising your prices 150%. We waited a little while to see where the tariffs would land. The last of the price increases really didn't go through till sometime in Q3.

Speaker #2: So a lot of them have a 60 or a 90-day window. And then we also waited at the beginning of the fiscal year to see where the tariffs would actually land.

Speaker #2: Because obviously we didn't want to go to the retailer and say, "Hey, we're raising your prices 150%." And so we waited a little while to see where the tariffs would land.

Speaker #2: And so the last of the price increases really didn't go through until sometime in the third quarter. So I think what we're seeing in the fourth quarter is the benefit of having the entire quarter with the retail price increases equal to the tariffs, or at least be closer to that.

Olivia Elliott: I think what we're seeing in Q4 is the benefit of having the entire quarter have the retail price increases equal the tariffs or be closer to that.

Anthony Labuzinski: Thank you very much. Best of luck.

Speaker #4: Thank you very much, and best of luck.

Speaker #2: Thank you.

Olivia Elliott: Thank you.

Operator: Thank you. Our next question comes from the line of John Deicher with Pinnacle Value Fund. Please proceed with your question.

Speaker #3: Thank you. Our next question comes from John Deischer with Pinnacle Value Fund. Please proceed with your question.

Speaker #5: Hi, good morning. Thanks for taking my questions. I was just curious—good morning—if there is anything on the horizon that might change your outlook for tariffs?

John Deicher: Hi, good morning. Thanks for taking my questions. I was just curious.

Olivia Elliott: Good morning.

John Deicher: Is there anything, good morning, anything on the horizon that might change your outlook for tariffs? I know the last time we spoke, in February, there was nothing imminent. I'm just curious with the fluid situation, is there anything on the horizon that might alter the tariff situation?

Speaker #5: I know the last time we spoke, in February, there was nothing imminent. But I'm just curious, given the fluid situation, is there anything on the horizon that might alter the tariff situation?

Speaker #2: I don't think so. I think we keep up with the news the same as you and you really never know what's going to happen.

Olivia Elliott: I don't think so. I think we keep up with the news the same as you really never know what's going to happen. Right now, it feels like it's stable.

Speaker #2: But right now, it feels like it's stable.

Speaker #5: It's stable. Steady, steady. Okay, good. When did you move from the old headquarters to the new? And is there any significant dollar savings from doing so?

John Deicher: It's stable. Steady state. Okay, good. When did you move from the old headquarters to the new and is there any significant dollar savings from doing so?

Speaker #2: We moved at the end of April, and there's really no significant dollar savings. They were really going up on the rent at the old building.

Olivia Elliott: We moved at the end of April, and there's really no significant dollar savings. They were really going up on the rent at the old building, and so the move allowed us to keep the rates pretty much close to what we had been paying before.

Speaker #2: And so, the move allowed us to keep the rates pretty much close to what we had been paying before.

Speaker #5: Okay. All right. That's good to hear. And in terms of the bigger picture, real estate situation, so you've extended Eden Valley's lease to match kind of what when Compton matures.

John Deicher: Okay. All right. That's good to hear. In terms of the bigger picture real estate situation, so you've extended Eden Valley's lease to match when Compton matures, I think that's May of 2028.

Speaker #5: I think that's May of '28. You're going to move from downtown Minneapolis. When do you start discussions with potential replacements for Compton? Is that by the end of the year, or a year from now?

Olivia Elliott: Correct.

John Deicher: You're going to move from downtown Minneapolis. When do you start discussions with potential replacements for Compton? Is that by the end of the year or a year from now, or when do you start looking for alternatives?

Speaker #5: Or when do you start looking for alternatives?

Speaker #2: Pretty much the end of the calendar year. So, starting in late fall, maybe the beginning of winter, we will start looking again at potential—really at potential cities.

Olivia Elliott: Pretty much the end of the calendar year. Starting in late fall, maybe beginning of winter, we will start looking again really at potential cities and then identify exactly where we want to move, and then following that, we would start looking at specific sites. It takes about 18 months.

Speaker #2: And then identify exactly where we want to move and then following that, we would start looking at specific sites. It takes about 18 months?

Speaker #5: 18 months from when to when?

John Deicher: 18 months from when to when?

Speaker #2: Identifying where we want to move to be, I mean, because most likely it's going to have to be a build-out. And so, dealing with all of that.

Olivia Elliott: From identifying where we want to move, because most likely it's going to have to be a build-out, and so dealing with all of that, and then we wouldn't want to just move everything at one time. We would start moving maybe Eden Valley earlier and then move Compton a little bit, maybe a month or two behind that.

Speaker #2: And then we wouldn't want to just move everything at one time, so we would start moving maybe Eden Valley earlier, and then move Compton a little bit, maybe a month or two behind that.

Speaker #5: Okay. Do you have a laundry list of locations that are at the top of the list right now?

John Deicher: Okay. Do you have a laundry list of locations that are at the top of the list right now?

Speaker #2: We don't right now. When we had looked at it about a year ago—18 months ago, I think—we had narrowed it down to Reno, Houston, and Memphis.

Olivia Elliott: We don't right now. When we had looked at it about a year ago, 18 months ago, I think we had narrowed it down to Reno, Houston, and Memphis, and were probably heavily leaning towards Reno. At this point in time, I think we're going to probably, I don't want to say start completely over, but we may add some more cities to the list and look at those.

Speaker #2: And we're probably heavily leaning towards Reno. But at this point in time, I think we're going to probably—I don't want to say start completely over.

Speaker #2: But we may add some more cities to the list and look at those.

Speaker #5: Okay. All right. Good. And that will start later this year or early calendar '27?

John Deicher: Okay. All right, good. That'll start later this year or early calendar 2027.

Speaker #2: Yes.

Olivia Elliott: Yes.

Speaker #5: Okay. Good. Great. Thanks very much.

John Deicher: Okay, good. Great. Thanks very much.

Speaker #2: Thank you.

Olivia Elliott: Thank you.

Speaker #3: Thank you. Ladies and gentlemen, as a final reminder, if you'd like to join the question queue, please press star one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, as a final reminder, if you'd like to join the question queue, please press star one on your telephone keypad. We'll pause a moment to allow for any other questions. Our next question comes from the line of Robert Johnston with Intertek Group. Please proceed with your question.

Speaker #3: We'll pause a moment to allow for any other questions. Our next question comes from Robert Johnson with Intertech Group. Please proceed with your question.

Speaker #6: Good morning. Just a very sort of top-level question—you probably can't give me a direct answer. But just looking at the cash flow generation and the valuation of the company, is the dividend, is that sort of a sacrosanct issue for the company?

Robert Johnston: Good morning. Just a very top-level question, and you probably can't give me a direct answer, but just looking at the cash flow generation and the valuation of the company, is the dividend, is that a sacrosanct issue for the company? Is that something you consider quarterly? Just any commentary around the dividend policy would be nice.

Speaker #6: Is that something you consider quarterly? Any commentary around the dividend policy would be appreciated.

Olivia Elliott: We really don't have a dividend policy per se. The board considers it every single quarter, and we talk about it at that time.

Speaker #2: We really don't have a dividend policy, per se. The Board considers that every single quarter, and we talk about it at that time.

Speaker #6: Okay. Thank you.

Robert Johnston: Okay. Thank you.

Speaker #2: Thank you.

Olivia Elliott: Thank you.

Speaker #3: Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Ms. Elliott for any final comments.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I will turn the floor back to Olivia Elliott for any final comments.

Speaker #2: Thank you. And thank you again, everyone, for joining today's call. We appreciate your support and look forward to providing additional updates as we move through our new fiscal year.

Olivia Elliott: Thank you. Thank you again, everyone, for joining today's call. We appreciate your support and look forward to providing additional updates as we move through our new fiscal year. If you have any additional questions, please don't hesitate to reach out. Thanks again.

Speaker #2: If you have any additional questions, please don't hesitate to reach out. Thanks again.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Q4 2026 Crown Crafts Inc Earnings Call

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