Shares of Crown Crafts (NASDAQ:CRWS) dropped on Wednesday despite an increase in gross profit because of a significant sales decline beginning in 2021.
Financial Highlights
Comparing the first quarter of fiscal 2022 and fiscal 2023, we see that the first quarter of fiscal 2023 net income was $1.4 million, or $0.14 per diluted share, on net sales of $15.7 million, down from $2.7 million, or $0.27 per diluted share, on net sales of $18.7 million. The current quarter’s gross profit as a percentage of net sales, 32.8%, is higher than the prior year’s comparable quarter’s gross profit as a percentage of net sales, 24.9%.
Forgiving the Company’s Paycheck Protection Program Loan (the “PPP Loan”) resulted in a pre-and post-tax gain on extinguishment of debt of $1,985,000, which boosted the company’s net income in the prior year. Carousel Designs, which terminated operations in May 2021, contributed $631,000 in net sales and $802,000 in a net loss to the prior-year quarter.
Net sales, gross margin percentage, net income, and diluted profits per share would have been $18.1 million, 29.3 percent, $1.5 million, and $0.15 if not for the PPP Loan and Carousel’s effect on the prior-year quarter.
Quarterly Dividend
A quarterly cash dividend of $0.08 per share has been declared by the Company’s Board of Directors and will be paid on October 7, 2022, to stockholders of record as of September 16, 2022. Because of the Company’s solid finances, stellar management, and promising future, “the Board is glad that our balance sheet is healthy and we can continue to reward our stakeholders with an excellent dividend,” Elliott declared.
CEO’s Remarks
Crown Crafts (NASDAQ:CRWS) CEO Olivia W. Elliott believes the company is well-positioned to weather the current economic storm. “While consumers became more price-sensitive during the quarter in response to rising inflation and retailers began reducing purchases as their inventories increased, we believe Crown Crafts (NASDAQ:CRWS) remains in a strong position to withstand these challenges,” she said. “We are making further investments to improve our technology and reorganize our business, as well as continuing to implement our long-term strategic plan, which includes expanding in the toy category, growing our product offerings both organically and through acquisition, increasing our direct sales to consumers, and so on.”
The increase in gross profit from the previous year to the current year was also highlighted by management. The report also highlighted the company’s efforts to strengthen its balance sheet.
Despite less profitable sales and income data, shares dropped 3.91% during afternoon trading.
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Author Shariq Khan 
