Crown Crafts, Inc. (CRWS) — 2025 10-K Deep Dive

In its 2025 annual report, Crown Crafts, Inc. (Nasdaq: CRWS) — a supplier of infant, toddler and juvenile product lines including bedding, diaper bags, bibs, toys and feeding products — posted a net loss of $9.4 million. The company also took a $13.8 million goodwill impairment related to its 2024 acquisition of Baby Boom Consumer Products. Below, we break down what drove those numbers, the company’s balance sheet strength, cash flow generation, key risk factors, and whether CRWS offers a compelling investment opportunity today.

Warren.AI 💰 3.5 / 10

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1. Business Overview

• Operations & Segments
• Three operating subsidiaries: NoJo Baby & Kids, Inc.; Sassy Baby, Inc.; Manhattan Toy Europe Limited.
• One reportable segment: infant, toddler and juvenile consumer products.
• Products sold under Company-owned brands (e.g., NoJo®, Sassy®, Manhattan Toy®) and licensed brands (e.g., Disney®, Marvel®, Star Wars®).

• Distribution & Customers
• Sells primarily to mass merchants, large chains and e-commerce.
• Top two customers represented 66% of sales in fiscal 2025: Walmart (47%) and Amazon (19%).
• No long-term purchase contracts; orders are placed on a seasonal and need basis.

• Supply Chain
• The bulk of manufacturing by contract factories in China.
• Quality and compliance audits by the Company’s in-country teams in Shanghai and Shenzhen.
• Exposed to ocean freight capacity, tariffs on Chinese imports and inland port backlogs.

• Recent Acquisition
• July 19, 2024: NoJo acquired Baby Boom Consumer Products for $18 million.
• Added net sales of $11.9 million from the acquisition through March 30, 2025.

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2. Fiscal 2025 Key Financials

In the year ended March 30, 2025:

• Net Sales: $87.25 million (down 0.4% vs. $87.63 million)
• Bedding & diaper bags up 28.2% (acquisition impact).
• Bibs, toys & disposables down 17.0% (inventory reductions by a major retailer).

• Gross Profit: $21.27 million vs. $23.00 million
• Margin fell from 26.2% to 24.4%.
• Deterioration driven by higher royalty expense (+$0.6 m), higher rent (+$0.3 m), and new China import tariffs (+$0.3 m).

• SG&A: $18.69 million vs. $16.11 million
• SG&A ratio jumped from 18.4% to 21.4% of sales.
• Incremental costs: Baby Boom integration ($1.2 m), UK subsidiary closure ($0.2 m), and higher advertising $0.3 m.

• Goodwill Impairment: $13.77 million
• Triggered by depressed stock price and market cap; wiped out remaining goodwill balance of the reporting units.

• Net Loss: $(9.36) million vs. +$4.89 million gain
• Loss per share: $(0.90) vs. +$0.48.

• Operating Cash Flow: +$9.8 million vs. +$7.1 million
• Working capital favorable swings in A/R and A/P partially offset by investment in Baby Boom.

• CapEx: $(0.9) million vs. $(0.8) million.

• Debt: $18.5 million (term loan + revolving line), with $13.8 million of borrowing capacity available.
• Term loan of $8 m funded the acquisition (4-year amortization); revolving line up to $40 m.

• Liquidity: Operating cash flow plus revolving capacity should support near-term needs; no immediate debt maturities beyond 2026 ($2 m).

• Dividend: $0.32 per share (paid in cash) — Company remains dividend-paying.
• Total payout: $3.3 million.

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3. Balance Sheet

• Assets: $81.2 m vs. $82.7 m
• Working capital $39.8 m ($55.3 m current assets less $15.5 m current liabilities).
• Inventories $27.8 m, net A/R $24.5 m (including $21.9 m factored).

• Operating Lease Right-of-Use Assets: $12.3 m (offset by lease liabilities of $13.1 m).

• Intangibles & Goodwill:
• Finite-lived intangibles $7.1 m (licensing, customer relationships).
• Goodwill $0 after $13.8 m impairment (previously $7.9 m).

• Liabilities: $41.5 m
• Current maturities on term loan $2 m; other current liabilities $13.5 m.
• Non-current debt $16.5 m; lease liabilities $9.1 m.

• Shareholders’ Equity: $39.6 m vs. $51.6 m • Treasury stock $15.9 m; retained deficit $3.3 m; paid-in cap $58.6 m.

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4. Cash Flow & Capital Resources

• Operating CF: $9.8 m (improved collections & payables timing).
• Investing CF: $(17.2) m (Baby Boom acquisition $16.3 m).
• Financing CF: +$7.0 m (net borrowing under revolver + term loan).
• Free Cash Flow: ~$8.9 m
• Operating CF less CapEx ~$0.9 m.

• Debt Leverage
• Net debt ~0.8x 2025 sales.
• Debt maturities manageable; covenants currently in compliance after recent waiver & amendment.

• Liquidity
• $521k cash + $13.8 m revolver availability.
• $9.8 m annual operating CF supportive of obligations & dividend.

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5. Key Risks & Considerations

1. Single-Customer Concentration

• Walmart (47% of sales) and Amazon (19%) leave CRWS heavily dependent on two accounts.
• Any slowdown in orders or program reductions at these customers can materially hurt revenue.

2. Licensed-Brand Exposure

• 50% of sales are licensed, including Disney (21% of total) with key agreements expiring September–December 2025.
• Failure to renew or higher royalty minimum guarantees are a risk.

3. Tariffs & Sourcing

• Primary production in China faces elevated U.S. tariffs, ocean freight disruptions (e.g., Red Sea diversions), and port backlogs.
• Passing through costs is a challenge; margin under pressure.

4. Demographic Trend

• U.S. birth rates have declined, particularly first-time mothers delaying or deferring having children.
• A shrinking addressable market for juvenile products is a long-term headwind.

5. Competitive Landscape

• Incumbents and private-label competition from large consumer-products players.
• China-based manufacturers selling direct to retailers at lower prices.

6. Integration & Goodwill

• The Baby Boom acquisition added sales but also SG&A and goodwill that proved impaired within one year.
• Future impairments and integration costs may recur if future acquisitions underperform.

7. Information Technology & Cybersecurity

• Like many mid-size brands, CRWS depends on third-party software and cyber controls.
• Breaches or disruptions could impair operations, supply chain and customer relationships.

8. Finance & Liquidity Covenants

• Debt covenants restrict M&A, asset sales, dividends and additional borrowing.
• A covenant failure may trigger immediate repayment under the revolver.

9. Financial Result Volatility

• SG&A as a percent of sales jumped to 21.4% in 2025.
• Fixed cost base and variable licensing royalties create margin swings when sales ebb.

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6. Outlook & Investment Thesis

A. Near-Term:

• Expect revenues to be lumpy based on big-box programs and new product timing.
• Tariffs likely remain in place; sourcing from non-China factories is possible but costly.
• SG&A likely to remain elevated as the Company digests Baby Boom and pursues growth initiatives.

B. Stabilizing Factors:

• Focus on high-margin owned brands and accessories to reduce licensed-royalty drag.
• New product lines and marketing for direct-to-consumer channels.
• Potential cost controls and re-negotiations of supply agreements.

C. Valuation Perspective:

• Market cap ~$45 million; net debt ~$18 million; enterprise value ~$63 million.
• 2025 sales $87 million; EV/Sales 0.7x (low).
• Negative EPS; operating profit may return only with sustained top-line growth and cost discipline.

D. Catalysts & Risks:

• Licensed renewals (Disney, Marvel) in late 2025.
• Big-box order cadence by major customers.
• Improvement in China supply chain or tariff relief.
• Further impairment if performance lags.

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7. Conclusion & Score — 3.5 / 10

Crown Crafts is a legacy consumer-products platform with strong brand heritage but significant customer concentration risk, reliance on Chinese contract manufacturing under tariff pressure, and demographic challenges in the core market. The $9.4 million loss (including a one-time $13.8 million goodwill impairment) is a stark reminder of the volatility in this business. While the stock trades at a low multiple to sales, operating margins must recover, and the company needs new growth levers beyond big-box retailers.

As an investment, CRWS is speculative, with a narrow margin for error. Only a decisive turnaround in category growth, relief from tariff pressures, or a landmark licensing deal would warrant a materially higher valuation.

Investment Potential Score: 3.5 / 10
Low sales visibility, high program risk, and no near-term margin relief

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Stay tuned for our next 10-K deep dive.