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    CROWN CRAFTS (CRWS)

    CRWS Q2 2025: Confident on $20M Baby Boom Annual Run Rate

    Reported on May 8, 2025 (Before Market Open)
    Pre-Earnings Price$4.47Last close (Nov 11, 2024)
    Post-Earnings Price$4.22Open (Nov 12, 2024)
    Price Change
    $-0.25(-5.59%)
    • Strong Growth from Baby Boom Acquisition: The Baby Boom acquisition added $3.4 million in net sales this quarter and is expected to reach an annual run rate of $20 million. This demonstrates clear revenue growth potential and enhanced product portfolio.
    • Robust Brand Performance: Key licenses such as Bluey—described as "on fire"—and Ms Rachel are generating strong consumer interest, underscoring the company's market leadership in popular licensed products.
    • Proactive Strategic Initiatives: The company is advancing initiatives such as launching its direct-to-consumer channels before the holidays and planning a cost-saving warehouse consolidation, which should improve margins and support sustainable long-term growth.
    • Warehouse Consolidation Risk: The company is still evaluating three potential warehouse sites with a plan to narrow them down only by the end of the fiscal year, which could result in delayed cost savings and continued higher operating expenses.
    • Margin Improvement Challenges: Efforts to enhance margins—especially for legacy brands like Manhattan Toy—are taking time since existing inventory and established pricing make rapid improvements difficult, potentially impacting profitability.
    • Tariff and Sourcing Vulnerability: Heavy reliance on Chinese manufacturing exposes the company to risks from potential tariff hikes or supply chain issues, which could raise costs if alternative sourcing options prove less efficient.
    1. Acquisition Outlook
      Q: Expect $20M Baby Boom run rate?
      A: Management remains confident that Baby Boom will hit an annual run rate of about $20M once a full year of sales is achieved, noting fiscal 2025 reflects only 8 months of operations.

    2. Cost Structure
      Q: What’s the marketing/admin expense run rate?
      A: Excluding the one-time acquisition cost of $788K, expenses run at roughly 19% of sales, reflecting steady cost management.

    3. Legacy Sales Impact
      Q: How did legacy sales suffer recently?
      A: Legacy sales declined partly due to the loss of a $600K bib program, amidst generally weak point-of-sale performance.

    4. Margin Improvement
      Q: Are Manhattan Toy margins improving?
      A: Yes, margins are gradually rising as new products, pricing adjustments, and manufacturer changes drive improved profitability.

    5. Direct-to-Consumer
      Q: When will NoJo’s website launch?
      A: The NoJo direct-to-consumer website is expected to be live before the holiday season, enhancing online engagement.

    6. Sourcing Strategy
      Q: What is the plan for China sourcing?
      A: Nearly all products are sourced from China due to superior cost and infrastructure, although alternatives are under review if tariffs rise.

    7. Warehouse Consolidation
      Q: What’s the warehouse consolidation status?
      A: The company is considering three locations and expects to narrow its options to two by year-end, aligning with operational efficiencies.

    8. Legoland Expansion
      Q: Update on Legoland expansion?
      A: The Legoland segment is growing, with new products and park openings slated for summer 2025, underlining potential expansion opportunities.

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