Crown Crafts, Inc. reported its financial results for the three and six-month periods ending September 29, 2024, showing mixed performance compared to the previous fiscal period.

For the three-month period, net sales increased to $24,460,000, up $331,000 (1.4%) from $24,129,000 in the same period last year. However, for the six-month period, net sales decreased to $40,672,000, down $580,000 (1.4%) from $41,252,000. A significant contributor to the quarterly sales growth was the bedding and diaper bags segment, which saw sales rise to $11,996,000, an increase of $2,220,000 (22.7%) compared to $9,776,000 in the prior year. Conversely, sales of bibs, toys, and disposable products fell by $1,900,000 due to the loss of a program at a major retailer.

Gross profit for the three-month period rose to $6,957,000, reflecting a $361,000 (5.5%) increase from $6,596,000, with the gross profit margin improving to 28.4% from 27.3%. However, income from operations decreased significantly, falling to $1,509,000 from $2,560,000 year-over-year. Net income for the three-month period was $860,000, a decrease of $962,000 (-52.8%) compared to $1,822,000 in the prior year. For the six-month period, net income dropped to $538,000, down $1,650,000 (-75.4%) from $2,188,000.

The company’s operating activities generated $7,030,000 in cash for the six-month period, an increase from $4,650,000 in the previous year. However, net cash used in investing activities surged to $(16,830,000) from $(51,000), primarily due to a $16,355,000 payment for the acquisition of Baby Boom Consumer Products, Inc. on July 19, 2024. This acquisition, which cost $18.0 million in cash, is expected to enhance the company’s product offerings in the infant and toddler market.

Marketing and administrative expenses increased by $1,412,000 (35.0%) to $5,448,000 for the three-month period, contributing to the decline in profitability. The company also reported a rise in royalty expenses, which increased to $1.7 million for the three months ended September 29, 2024, compared to $1.5 million in the prior year.

As of September 29, 2024, the company had $20.8 million in variable-rate debt, with a revolving line of credit balance of $13.1 million. The company’s accounts receivable stood at $24.4 million, with $17.2 million due from CIT under factoring agreements. Overall, the company continues to navigate challenges in sales while strategically expanding its product portfolio through acquisitions.