Conferencia de resultados del primer trimestre fiscal de 2027 de Crown Crafts (CRWS): las ventas suben un 8% y el margen se expande

Crown Crafts (NASDAQ: CRWS) informó de un incremento en las ventas, una expansión del margen bruto ajustado y el retorno a la rentabilidad en el primer trimestre de su ejercicio fiscal 2027. La mayor disponibilidad de inventario impulsó los ingresos, mientras que las devoluciones de aranceles beneficiaron de forma significativa las ganancias GAAP y la generación de efectivo.

Puntos clave

• Las ventas netas alcanzaron los 16,8 millones de dólares, lo que supone un aumento del 8%, ya que la mejora en los niveles de inventario permitió a Crown Crafts responder mejor a la demanda a pesar de la debilidad del gasto de los consumidores.
• El beneficio bruto ajustado se situó en 4,3 millones de dólares, mientras que el margen bruto ajustado aumentó 290 puntos básicos interanuales hasta el 25,6%, respaldado por iniciativas de fijación de precios y una mezcla de productos de mayor margen.
• El beneficio neto GAAP fue de 2,1 millones de dólares, o 0,19 dólares por acción, frente a la pérdida de 1,1 millones de dólares, o 0,10 dólares por acción, registrada en el mismo periodo del año anterior.
• Las devoluciones de aranceles redujeron el coste de los productos vendidos en 3,7 millones de dólares durante el trimestre. La empresa señaló que también generó beneficios tras ajustar el efecto positivo relacionado con los aranceles.
• El flujo de caja operativo ascendió a 5,5 millones de dólares, mientras que la deuda disminuyó desde más de 14 millones de dólares al comienzo del ejercicio fiscal a 9,6 millones de dólares al cierre del trimestre.
• La dirección afirmó que las ventas del relanzamiento de Groovy Girls superaron las expectativas, impulsadas principalmente por Canadá, mientras que los lanzamientos en Europa y Amazon están previstos para el otoño.

Datos financieros principales

Rendimiento comercial y operativo

La mejora en los niveles de inventario fue el principal motor de las ventas. La dirección afirmó que Crown Crafts estaba mejor posicionada para satisfacer la demanda que durante la inestabilidad arancelaria del año anterior.

La mejora de los márgenes continuó incluso excluyendo las devoluciones de aranceles. La empresa atribuyó la expansión del margen bruto ajustado a la fijación estratégica de precios y a una combinación cada vez más favorable de productos de mayor margen. El control de costes también redujo los gastos normalizados de comercialización y administración como porcentaje de las ventas.

La línea relanzada Manhattan Toy Groovy Girls tuvo un rendimiento especialmente bueno en Canadá. La demanda fue lo suficientemente fuerte como para que Crown Crafts comenzara a redirigir inventario destinado originalmente al mercado de Estados Unidos. La dirección destacó el apoyo de su distribuidor canadiense y de las acciones de comercialización y el evento de lanzamiento de Indigo Bookstores.

Las ventas internacionales también se beneficiaron del nuevo distribuidor canadiense de Crown Crafts, que gestiona tanto las líneas de productos Manhattan Toy como Sassy a través de diversos canales. Los nuevos distribuidores europeos incorporados desde el otoño anterior aportaron mejoras adicionales.

La empresa está llevando a cabo una consolidación operativa y la reducción de la deuda. Se prevé que la consolidación de sus almacenes lleve aproximadamente 18 meses, con fecha de finalización prevista para mayo de 2028. La dirección indicó que es poco probable que haya desembolsos relacionados en el ejercicio fiscal 2027 y que probablemente comenzarán en el siguiente ejercicio fiscal.

Crown Crafts también ajustó el tamaño de su dividendo trimestral para retener más efectivo para inversiones de crecimiento y el pago de la deuda. La dirección describió el dividendo revisado como una rentabilidad aproximada del 4%.

Perspectivas de la dirección y cronograma

La dirección planea lanzar Groovy Girls en K&J en Alemania en septiembre para los mercados europeos. El lanzamiento en Amazon sigue previsto para octubre, aunque la fuerte demanda canadiense podría limitar la oferta inicial en Amazon a solo una parte de la línea de productos.

Se prevé que las inversiones de capital actuales sigan centradas en partidas habituales como TI, actualizaciones de ERP y moldes para juguetes de plástico. Se espera que los gastos de capital relacionados con los almacenes no comiencen antes del próximo ejercicio fiscal.

El contrato de arrendamiento de la oficina de Manhattan Toy en Minnesota vence a finales de marzo del próximo año y no se renovará. La dirección está considerando la opción del trabajo a distancia para la pequeña plantilla local o un espacio más reducido que podría incluir un estudio de fotografía.

Riesgos y factores a vigilar

• La dirección calificó el gasto de los consumidores de débil en un contexto de tipos de interés elevados, inflación e incertidumbre geopolítica global.
• Las ganancias GAAP del primer trimestre fiscal recibieron un beneficio significativo por las devoluciones de aranceles, aunque la dirección señaló que la empresa se mantuvo rentable en términos ajustados.
• Crown Crafts solicitó entre 5,6 y 5,7 millones de dólares en reembolsos de aranceles y había recibido y contabilizado aproximadamente 4,7 millones de dólares. Quedaron unos 900.000 dólares pendientes de recibir y contabilizar.
• La fuerte demanda de Groovy Girls en Canadá ha obligado a desviar inventario desde Estados Unidos, lo que podría limitar el alcance de la oferta inicial en Amazon.
• La consolidación de almacenes requerirá una inversión inicial y un periodo de implantación de aproximadamente 18 meses.

Puntos destacados de la sesión de preguntas y respuestas de analistas

La dirección afirmó que el desempeño de Groovy Girls en Canadá ha superado las expectativas. La relación del distribuidor con Indigo Bookstores y las actividades de comercialización de apoyo probablemente ayudaron al lanzamiento, aunque la dirección no identificó una razón más amplia para la solidez particular de la marca en Canadá.

La mayor parte de los aproximadamente 4,7 millones de dólares en reembolsos de aranceles contabilizados se recibió en julio. Al cierre del trimestre, el importe se registró en otros activos corrientes en lugar de deudores comerciales.

La dirección prevé que el proyecto de consolidación de almacenes comience a finales de otoño o principios de invierno y tenga como objetivo completarse en mayo de 2028. Las inversiones de capital del ejercicio actual deberían concentrarse en los gastos habituales de TI, ERP y moldes para productos.

Los nuevos bolsos cambiadores de Motherhood han comenzado a venderse en Amazon pero tuvieron un lanzamiento inicial lento. Crown Crafts también cuenta con dos bolsos de la marca NoJo, incluido uno comercializado a través de Walmart, y continúa desarrollando la categoría.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Good afternoon, everyone. everyone and welcome to the Crown Crafts Fiscal Year 2027 First Quarter Conference Call. During today's call, the company may make certain forward-looking statements, and actual results may differ materially from those expressed or implied. These statements are subject to risks and uncertainties that may be beyond Crowncraft's control, and the company is under no obligation to update these statements. For more information about the company's risk factors and other uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K. With that, I would now like to turn the call over to President and Chief Executive Officer Olivia Elliott. Please go ahead.

Olivia Elliott

Thank you, Operator, and thank you, everyone, for joining this afternoon's call. Today, after the close, Crown Crafts reported very solid quarterly results, given the still-solved demand environment. We accomplished this by focusing on what we can control, and our team did a terrific job executing on our strategy. We were able to grow our net sales 8% despite the uncertainty that consumers continue to feel around high interest rates, inflation, and global geopolitical events. Improved inventory levels account for most of the growth, as we were able to better meet demand than during last year's tariff instability. Just as important, we were able to drive a higher gross margin, both on a GAAP basis and also when adjusting for tariff refunds, as Claire will walk us through in a moment. On an adjusted basis, our growth margin for the quarter climbed nearly three full percentage points year over year to 25.6%.

As a result, we were able to produce positive net income versus the loss reported in the prior year period, and we once again generated positive operating cash flow of nearly $5 million, similar to the March quarter. Combined with a significant reduction in our debt balance during the quarter, our balance sheet is significantly strengthened. As we mentioned on our last call, during the June quarter, we relaunched Manhattan Toy Brands Groupie Girl. pleased to say that so far, sales of this iconic line of fashion dolls has exceeded our expectations, largely driven by the Canadian market. And we believe this bodes well for continued success of this retro-inspired beloved brand. Next, I'll provide an update on our strategic initiatives to grow both our top and bottom line. Our priority is our ongoing innovative internal product development to expand our product offering. Another initiative is to build on our recent margin expansion to further drive profitability.

We're moving towards a favorable mix of higher margin products and, of course, our relentless spending disciplines. We're also striving to consolidate certain internal operations for greater efficiency, reduce our debt levels, and over the next two years, we'll be working on warehouse consolidation to further enhance our operating structure. These initiatives to create long-term value can often require upfront investment, and to that end, our Board has elected to right-size our quarterly dividend, which will provide us strategic access to a greater portion of our cash flow. That will also allow us to pay down debt and build the balance sheet strength that will support Crowncraft's growth well into the future. In essence, our new quarterly dividend allows for a well-balanced capital allocation approach that includes investing in growth initiatives and maintaining a solid balance sheet, while still rewarding our valued shareholders with what is now approximately a 4% attractive dividend yield. In closing, we had a solid quarter as we continued to execute on our business plan. While leveraging our inherent strengths, including our brands, our licenses, and our valued retail and licensing partners, our multi-pronged strategy that covers internal development of new products, reinvigorated marketing efforts, tight cost controls, and the strategic allocation of capital, positions as well for the creation of long-term shareholder value.

And now I'll turn it over to Claire to provide additional details around our quarterly results before we take your questions.

Unknown Speaker

Thank you, Olivia, and welcome everyone once again to the call. Our first quarter net sales of $16.8 million were up 8% over the prior quarter as improved inventory levels helped us capitalize on still soft consumer spending. As Olivia mentioned, we had strong growth margin performance. During the quarter, tariff refunds reduced our cost of products sold by $3.7 million. Even adjusting for this benefit, our gross profit of $4.3 million was above the prior year's $3.5 million and equates to a gross profit margin of 25.6%, which was up 290 basis points year-over-year. This section of our adjusted growth margin reflects both our strategic pricing initiatives and an increasingly favorable mix of higher margin products. We recorded marketing and administrative expense of $5.2 million for the first quarter as compared to $4.7 million a year earlier, although this quarter's figure includes just over half a million dollars of accrued incentive and compensation associated with tariff refunds.

On a normalized basis, we reduced marketing and administrative expense as a percent of net sales to 28% versus 30.5% in the first quarter of fiscal 2026, which speaks to our sharp focus on cost efficiencies, as Olivia mentioned. Moving down the income statement, we also successfully reduced net interest expense to only $190,000, well below the year ago $283,000 as a result of our efforts to reduce debt over the past year. From a GAAP perspective, we reported net income of $2.1 million, or $0.19 per share, well above the prior year loss of $1.1 million, or $0.10 per share. While first quarter net income benefited from the tariff-related adjustments described, I'll again note that on an adjusted basis, we still generated the first quarter profit versus the prior year quarter's net. loss. Turning to our balance sheet, as of June 28, we had total liquidity of $12.1 million, including cash and equivalents and availability on our revolving line of credit. During the first quarter, we significantly reduced our debt from more than 14 million at the start of the fiscal year to just 9.6 million at the end of the quarter. Not only do we reduce outstanding debt, but our net cash from operating activities of $5.5 million served to further support our balance sheet strength, putting us in a strong position to capitalize on future growth opportunities in a disciplined manner.

In summary, this was another quarter of strong execution in which we focused on what we can control while economic conditions remained soft. Even adjusted for tariff refunds, we grew revenues, expanded our growth margin, and generated stronger earnings per share than in the year-ago quarter. further strengthen our balance sheet and are well positioned to make progress against our strategic initiatives as we move through the new fiscal year. And now And now, operator, if you could please open the lines, Olivia and I would be happy to take questions. Thank you.

Operator

We will now be conducting a question and answer session. If you would 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 2 if you would 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. and again that is star 1 if you would like to ask a question and our first question will come from Doug Ruth with Lenox Financial Services.

Unknown Speaker

Olivia and Claire, congratulations, fabulous report. I have several questions, so if you like I'm asking too many and I'll mind getting back in the queue. Could you give us a...

Olivia Elliott

offer some commentary of what you think is happening with Groovy Girls? So Groovy Girls has done phenomenally well in Canada. And as we look back on history, even when, you know, before we acquired Manhattan Toy, the first time they launched Groovy Girls, it appears that it took off in Canada first then as well. So, yes. We have actually sold so much in Canada at this point in time that we're having to divert inventory that should be coming to the US to go to Canada. So we're really excited about the opportunity there. And then we'll be launching Groovy Girls at K&J in Germany for the European markets in September.

Unknown Speaker

Okay. Is there a theory of why the Canadians like Groovy Girls so much?.

Olivia Elliott

We don't know. I can tell you that our distributor, they are partnered with Indigo Bookstores who really put some marketing efforts behind it and they hosted an event so that probably helped with it to.

Unknown Speaker

have such a large partner to launch with. Okay. What about, you had previously mentioned that ultimately the Groovy Girls will be on Amazon. Is there like a date that that might happen?.

Olivia Elliott

We are still hoping to launch early fall the inventory having it take off faster than we expected, it may not be the full line, but we're still targeting October sometime with at least part of the line.

Unknown Speaker

Okay, very good. And then could you explain to us what the status is of the I think you had told us there was maybe around 5 million, maybe 5 and 1 half million.

Olivia Elliott

expecting more money or do you think that's it or we're hoping to get more money so we had Requested reimbursement for 5.6 to 5.7 million in tariffs. And so far we've received about 4.7 million. And that is the portion that we booked. Most of that was received in July. A very, very small portion had been received in the first quarter. There's about 900,000.

Unknown Speaker

we still haven't received and we have not booked okay and then how is the balance sheet changed from or are you able to tell us anything about you know where the balance sheet is now versus where it was you know based on maybe tariff money.

Olivia Elliott

You mean as of today versus the quarter end? Yes. It's certainly improved by getting $4-plus million in cash in in the month of July, but that's about all we can really tell you. Oh, okay. I didn't realize the $4 million came in in July. Okay, very good. Yes. So it was booked as other current assets as opposed to a trade receivable at quarter end and quarter end.

Unknown Speaker

I see. So that's the other current asset that's on the balance sheet. Yes, and I think there's more information Claire just pointed out in – Footnote four. Footnote four. Okay, good. Okay, and then what can you tell us about the warehouse?.

Olivia Elliott

We'll be starting that project sometime in late fall or early winter. It's about an 18-month process and the plan is to get it consolidate sometime in May of 2028. So that process is not quite started yet.

Unknown Speaker

Okay and can you provide any additional details about capital expenditures and what you're thinking and how much you might be spending?.

Olivia Elliott

As of right now, our capital expenditures should just be the normal capital expenditures, which is mainly IT, so it would be any ERP upgrades that we're going through right now. molds for plastic toys, anything for the warehouse is unlikely to be spent in this fiscal year. It'll probably start sometime in the next fiscal year.

Unknown Speaker

Okay. All right. And then how about the international sales are doing so well. Can you share anything that's happening and why they're doing so well or what you're doing and the kind of.

Olivia Elliott

stuff. A lot of that's Groovy Girls in Canada, but it's more than that in Canada as well. We had two different distributors in Canada previously and starting in this calendar year, maybe a little bit in December of 25. we got a new distributor that is handling both the Manhattan Toy and Sassy product lines and taking that to all channels. So we've seen a pretty good improvement there across the board. Groovy Girls certainly added to it. And then we did starting when we went to K&J last fall, we did pick up some new distributors that started buying product maybe later in the fall, early winter. So a little bit in Europe, a little improvement as well.

Unknown Speaker

Okay. And then what can you tell us about Legoland? And we know we got that big new facility or I guess it's a year old now in Shanghai. What's happening with Legoland?.

Olivia Elliott

I don't think there's been any changes with Legoland. That was the last new park of any size and a little A lot of the parks for Legoland actually start winding down and closing for the winter. So there are some that are open, I know like Florida and California stay open year round, but a lot of them close maybe sometime in October. So those are more seasonal sales than year round.

Unknown Speaker

Okay. And then how about the Manhattan Toy Office in Minnesota? Is there any thoughts or updates on that at all?.

Olivia Elliott

That lease expires at the end of March next year. So we'll obviously not renew that lease. We're still kind of thinking about what we need, if anything at all, in Minneapolis. If we do get a lease, I mean there's two trains of thought there, we can either let, it's very small staff so they can either work from home full-time or we may need some small lease that can just hold a few people and some like a photography studio but but we will not be renewing the.

Unknown Speaker

very expensive lease that we're in right now. Okay. And my last question, is there Any new thoughts or ideas on diaper bags and how the company might proceed with that business?.

Olivia Elliott

We're still working on that product line. We did just start selling the new motherhood diaper bags. Very slow start at this point in time. It's only on Amazon. We're working on that. We have a couple of No-Joe bags, No-Joe branded, one of which is in Walmart. That's really it right now but we haven't given up on diaper bags we're just still working on it.

Unknown Speaker

Okay. You just did a fabulous job and thank you for what you did on behalf of the shareholders.

Operator

Thank you. And this now concludes our question and answer session. I would like to turn the floor back over to Olivia Elliott for closing comments.

Olivia Elliott

Thank you, Operator, and again, we appreciate everyone being on the call. We look forward to building on the early success of Groovy Girl and our other innovative products on the way. We appreciate your continued interest in Crown Crafts and will keep you posted on our progress as we move through the new fiscal year. Please feel free to reach out with any additional questions, and thanks again for your time.

Operator

for being with us. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

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[Call has ended.]