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Crimson Wine Group Q3 Earnings Rise Y/Y on Settlement, Revenues Fall
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Shares of Crimson Wine Group, Ltd. (CWGL - Free Report) have inched up 0.4% since issuing results for the third quarter of 2025, modestly trailing the S&P 500’s 0.8% growth over the same period. However, over the past month, the stock has fallen 1.7%, while the broader index advanced 3.7%, reflecting investor caution despite a return to quarterly profitability.
In the latest quarter, revenues fell 21% to $13.3 million from $16.9 million a year ago, as declines persisted across Wholesale, Direct-to-Consumer (DTC) and Other revenue streams.
Despite the contraction in the top-line performance, the company reported net income of $0.9 million, significantly above the prior-year quarter’s $38,000 profit. Earnings per share were 5 cents versus essentially breakeven a year earlier. The improvement stemmed from a $2.5-million insurance settlement tied to the 2017 wildfires, recorded in other income, which more than offset the weaker operating performance. Gross profit fell 22% year over year to $6.3 million from $8.1 million, and the operating loss widened to $1.2 million from $0.3 million.
Other Key Business Metrics
The quarter reflected broad-based pressure on sales volumes and continued softness in wholesale shipments. Wholesale revenues dropped 34% due to reduced domestic shipments, higher discounts and lingering weakness in export markets. DTC sales slipped 4% due to lighter tasting-room traffic. Other revenues declined 12%, reflecting lower custom winemaking services.
The gross margin held relatively steady at 47%, down slightly from 48% in the prior-year period. The Wholesale gross margin remained constant at 41%, supported by the sale of lower-cost vintages, although this benefit was largely offset by elevated discounting. DTC margin expanded to 66% from 65%, continuing to reflect the favorable economics of direct retail sales. Conversely, the Other category posted a loss of $0.3 million against a slight profit last year, driven by increased inventory write-downs as market conditions caused certain wines to be sold below costs.
Operating expenses decreased 11% year over year to $7.5 million, with sales and marketing falling 15%, and general and administrative costs declining 7%. Reduced promotional spending, lower bonuses and fewer professional service expenses contributed to the cost improvements.
Management Commentary
Management highlighted persistent softness in wholesale demand, citing both timing and market-driven dynamics that affected shipment volumes. Distributors reduced orders amid cautious inventory management and patchy consumer trends, particularly in on-premise channels. The company also noted that a strategic shift in California distribution, initiated in June, was largely completed during the quarter. While the transition did not materially affect the third-quarter results, management acknowledged the potential for future variability as retail accounts adjust to the new distribution footprint.
The DTC performance reflected lower foot traffic and fewer wine club shipments than the prior year. E-commerce continued to provide some relief, though not enough to offset volume declines elsewhere.
The company emphasized cost discipline throughout the quarter, with reductions in promotional spending and corporate overhead helping mitigate the impacts of lower revenues. Management reaffirmed its focus on maintaining profitability through expense control, product mix optimization and targeted investment in higher-margin channels.
Factors Influencing the Headline Numbers
Weather-driven agricultural variability, inventory management decisions and international trade conditions were among the most significant external factors affecting the performance. Inventory write-downs rose sharply to $0.7 million for the quarter from $0.4 million, reflecting wine expected to be sold at a loss, given the current market dynamics.
Export demand remained affected by trade tensions, particularly with Canada, where shipments were suspended earlier in the year and only gradually resumed. Despite partial recovery, negative sentiment toward U.S. alcoholic products continued to pressure volumes.
Higher other income materially benefited the bottom line. The $2.5-million insurance settlement related to the 2017 wildfires recorded in the third quarter drove nearly all of the improvement in net income. Interest expenses declined slightly due to lower outstanding principal balances on long-term debt.
Other Developments
In the quarter, Crimson Wine Group completed its suspension of the previously authorized share repurchase program, which had been active since 2023. Prior to suspension, the company repurchased 58,252 shares for the first nine months of 2025 at an average price of $5.92. The company also disclosed ongoing legal proceedings related to a 2024 cybersecurity incident. While management reported no material financial impacts, a class-action lawsuit remains pending.
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Crimson Wine Group Q3 Earnings Rise Y/Y on Settlement, Revenues Fall
Shares of Crimson Wine Group, Ltd. (CWGL - Free Report) have inched up 0.4% since issuing results for the third quarter of 2025, modestly trailing the S&P 500’s 0.8% growth over the same period. However, over the past month, the stock has fallen 1.7%, while the broader index advanced 3.7%, reflecting investor caution despite a return to quarterly profitability.
In the latest quarter, revenues fell 21% to $13.3 million from $16.9 million a year ago, as declines persisted across Wholesale, Direct-to-Consumer (DTC) and Other revenue streams.
Despite the contraction in the top-line performance, the company reported net income of $0.9 million, significantly above the prior-year quarter’s $38,000 profit. Earnings per share were 5 cents versus essentially breakeven a year earlier. The improvement stemmed from a $2.5-million insurance settlement tied to the 2017 wildfires, recorded in other income, which more than offset the weaker operating performance. Gross profit fell 22% year over year to $6.3 million from $8.1 million, and the operating loss widened to $1.2 million from $0.3 million.
Other Key Business Metrics
The quarter reflected broad-based pressure on sales volumes and continued softness in wholesale shipments. Wholesale revenues dropped 34% due to reduced domestic shipments, higher discounts and lingering weakness in export markets. DTC sales slipped 4% due to lighter tasting-room traffic. Other revenues declined 12%, reflecting lower custom winemaking services.
The gross margin held relatively steady at 47%, down slightly from 48% in the prior-year period. The Wholesale gross margin remained constant at 41%, supported by the sale of lower-cost vintages, although this benefit was largely offset by elevated discounting. DTC margin expanded to 66% from 65%, continuing to reflect the favorable economics of direct retail sales. Conversely, the Other category posted a loss of $0.3 million against a slight profit last year, driven by increased inventory write-downs as market conditions caused certain wines to be sold below costs.
Operating expenses decreased 11% year over year to $7.5 million, with sales and marketing falling 15%, and general and administrative costs declining 7%. Reduced promotional spending, lower bonuses and fewer professional service expenses contributed to the cost improvements.
Management Commentary
Management highlighted persistent softness in wholesale demand, citing both timing and market-driven dynamics that affected shipment volumes. Distributors reduced orders amid cautious inventory management and patchy consumer trends, particularly in on-premise channels. The company also noted that a strategic shift in California distribution, initiated in June, was largely completed during the quarter. While the transition did not materially affect the third-quarter results, management acknowledged the potential for future variability as retail accounts adjust to the new distribution footprint.
The DTC performance reflected lower foot traffic and fewer wine club shipments than the prior year. E-commerce continued to provide some relief, though not enough to offset volume declines elsewhere.
The company emphasized cost discipline throughout the quarter, with reductions in promotional spending and corporate overhead helping mitigate the impacts of lower revenues. Management reaffirmed its focus on maintaining profitability through expense control, product mix optimization and targeted investment in higher-margin channels.
Factors Influencing the Headline Numbers
Weather-driven agricultural variability, inventory management decisions and international trade conditions were among the most significant external factors affecting the performance. Inventory write-downs rose sharply to $0.7 million for the quarter from $0.4 million, reflecting wine expected to be sold at a loss, given the current market dynamics.
Export demand remained affected by trade tensions, particularly with Canada, where shipments were suspended earlier in the year and only gradually resumed. Despite partial recovery, negative sentiment toward U.S. alcoholic products continued to pressure volumes.
Higher other income materially benefited the bottom line. The $2.5-million insurance settlement related to the 2017 wildfires recorded in the third quarter drove nearly all of the improvement in net income. Interest expenses declined slightly due to lower outstanding principal balances on long-term debt.
Other Developments
In the quarter, Crimson Wine Group completed its suspension of the previously authorized share repurchase program, which had been active since 2023. Prior to suspension, the company repurchased 58,252 shares for the first nine months of 2025 at an average price of $5.92. The company also disclosed ongoing legal proceedings related to a 2024 cybersecurity incident. While management reported no material financial impacts, a class-action lawsuit remains pending.