Crown Crafts (CRWS) Q3 2026 Earnings Transcript

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Wednesday, Feb. 11, 2026 astatine 9 a.m. ET

• Chairman and Chief Executive Officer — Olivia Elliott

• Chief Financial Officer — Claire Spencer

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Olivia Elliott: Thank you, John, and bully morning, everyone. As we noted successful the property merchandise issued earlier today, we judge our 3rd 4th results show the resilience of our concern exemplary and the diligent efforts of our squad arsenic we enactment to flooded the challenging request situation and the ongoing effects of higher tariffs. Net income for the 3rd 4th were $20.7 cardinal compared with $23.4 cardinal successful the anterior twelvemonth quarter, portion nett income accrued to $1.5 cardinal from $900,000 a twelvemonth ago. We are committed to driving profitability arsenic we proceed to execute connected pricing and outgo actions to offset the income environment.

While we are encouraged by the affirmative show successful our bibs, toys, and disposable categories during the vacation season, the macro backdrop remains hard for our category. Elevated U.S. tariff rates person raised merchandise costs and contributed to uncertainty from definite China-based suppliers, portion user spending remains uneven and price-sensitive. Third 4th gross borderline was 23.5% compared with 26.1% successful the anterior twelvemonth quarter, contempt our ongoing mitigation efforts. Also impacting gross borderline were definite one-time costs that Claire volition talk to successful a moment. Within this environment, we are staying focused connected what we tin control. For starters, we are precise excited astir our merchandise pipeline.

Earlier this week, we announced Manhattan Toys' relaunch of Groovy Girls, an iconic enactment of brushed manner dolls that volition beryllium disposable starting successful May 2026. This relaunch reflects the spot of Manhattan Toy's portfolio and our committedness to interior merchandise development. We judge Groovy Girls volition make opportunities with specialty customers and successful direct-to-consumer arsenic we broaden our scope successful the juvenile space. Operationally, our proviso concatenation squad continues to enactment intimately with our sourcing partners successful China and different regions to negociate done tariffs, freight, and capableness constraints.

The bulk of our products are produced by overseas declaration manufacturers with the largest attraction successful China, and we stay focused connected quality, compliance, and reliability portion besides continuing to measure alternate sources of proviso wherever appropriate. Our inventory strategy has been deliberately blimpish arsenic we purpose to minimize vulnerability to excess inventory successful a volatile pricing and tariff environment. We besides proceed to execute connected outgo initiatives, with further plans to consolidate definite interior operations. During the quarter, we incurred $600,000 successful severance expenses successful transportation with these consolidation efforts.