Shares of Crown Crafts, Inc. (CRWS Quick QuoteCRWS - Free Report) have lost 12.5% since the company reported earnings for the quarter ended March 30, 2025. This compares to the S&P 500 Index’s 0.7% gain over the same time frame. Over the past month, the stock has lost 11.3% versus the S&P 500’s 6.3% rise.

CRWS’ Revenue & Profitability Performance

For the fourth quarter of fiscal 2025, Crown Crafts reported net sales of $23.2 million, a 2.9% increase over the prior-year period’s $22.6 million. However, the bottom line took a significant hit, with the company posting a GAAP net loss of $10.8 million, or $1.04 per diluted share, against the prior-year period’s net income of $1 million, or $0.10 per diluted share. This sharp decline was due to a $13.8 million non-cash goodwill impairment charge related to the company’s declining market capitalization. Excluding this charge, the adjusted net loss was $429,000, or $0.04 per diluted share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Gross profit for the fiscal fourth quarter fell 18.8% to $4.2 million from $5.2 million a year earlier. Gross margin narrowed to 18.3% from 23.2% a year ago, primarily due to an unfavorable sales mix and tariff-related costs.

For the full fiscal year, revenues were down 0.4% to $87.3 million from $87.6 million. Adjusted net income came in at $1.0 million ($0.10 per share). GAAP net loss was $(9.4) million, or $(0.90) per diluted share, against net income of $4.9 million, or $0.48 per diluted share.

Gross profit fell 7.5% to $21.3 million from $23 million a year earlier, and the gross margin narrowed to 24.4% from 26.2%.

Crown Crafts’ Other Key Business Metrics

Crown Crafts ended the fiscal year with $0.5 million in cash and cash equivalents, down from $0.8 million the previous year. Inventory was reduced by 6.4% from the comparable period of fiscal 2024 to $27.8 million, reflecting a strategy of higher closeout sales in preparation for a warehouse consolidation. Marketing and administrative expenses climbed 17% in the fourth quarter of fiscal 2025 to $4.6 million from $3.9 million, largely due to the integration of Baby Boom Consumer Products and higher advertising spend. Borrowings under the company’s credit facility rose to $18.5 million due to the Baby Boom acquisition.

Full-year operating cash flow was strong at $9.8 million, up from $7.1 million in fiscal 2024, enabling continued dividend payments and debt servicing. However, long-term debt more than doubled to $16.5 million from $8.1 million, stemming from the Baby Boom acquisition.

CRWS’ Management Commentary

CEO Olivia Elliott described fiscal 2025 as another “transitional year,” shaped by persistent inflation and reduced consumer discretionary spending. She emphasized that strategic initiatives — including acquisitions, ecommerce expansion and cost containment — were implemented with an eye on long-term gains. While economic pressures have weighed on immediate results, the company remains optimistic about its future positioning. Elliott highlighted improved retail partnerships and a streamlined product portfolio as its key strengths heading into fiscal 2026.

Factors Influencing Crown Crafts’ Results

Multiple headwinds converged during the fourth quarter of fiscal 2025. A higher volume of closeout sales — designed to lower inventory — came at lower margins. In addition, $324,000 in increased tariffs and higher royalty expenses, stemming from the Baby Boom business, further squeezed margins. The most material hit came from the $13.8 million goodwill impairment, attributed to the prolonged decline in CRWS’ market capitalization. This charge erased all goodwill from the balance sheet as of March 30, 2025.

CRWS’ Guidance and Outlook

While Crown Crafts did not provide formal financial guidance, management acknowledged significant near-term challenges, particularly in relation to tariffs. Elliott noted that newly ordered goods are now subject to an additional 30% tariff. The company is working with both suppliers and retail partners to share this burden and is exploring various mitigation strategies. Meanwhile, Crown Crafts’ leadership reaffirmed its commitment to driving growth through product and channel expansion.

Crown Crafts’ Other Developments

During fiscal 2025, Crown Crafts completed the acquisition of Baby Boom Consumer Products, adding diaper bags and popular licensed brands, such as Bluey and Ms. Rachel, to its portfolio. The company also finalized the full integration of Manhattan Toy and closed its U.K. subsidiary, incurring $244,000 in related costs.

In international markets, Crown Crafts transitioned its European operations to a distributor model, a move expected to support long-term sales growth. The company is also supplying plush products for the newly opened LEGOLAND in Shanghai, where it expects to become the exclusive plush vendor. Additionally, the redesigned "Love, Stella" doll line — gaining exposure from a Meghan Markle endorsement — was cited as a highlight in CRWS’ marketing initiatives.