Crown Crafts Cuts Interest To Grow Profits
Home & Textiles Today Staff -- Home Textiles Today, November 28, 2005
Fueled by a deep cut in interest expense, rising margins and a lower tax bill, all of which helped to offset slumping sales, second fiscal quarter profits at Crown Crafts Inc. climbed 36.4 percent, to $1.2 million from $844,000 last year.
But sales at the supplier of infant bedding and juvenile products dropped 7.6 percent, to $21.3 million from $23 million last year. Sales of infant bedding fell 9.3 percent, to $14.8 million; bibs and bath declined 1.9 percent to $5.8 million; and hand-woven throws from the Churchill Weavers division dropped 13.7 percent, to $729,000.
Sales in the core bedding business were hurt, the company said, because a $900,000 product placement shipped in the year-before period “was not repeated at the same levels” this year. Another $900,000 drop in sales, the company said, stemmed from “an erosion in prices due to a change in shipping points” to accommodate a major supplier. A further $200,000 represented a decrease in Pillow Buddies sales.
Providing a big lift to the bottom line, interest costs were slashed 21 percent, to $740,000 from $937,000 last year, yielding a cash savings of $237,000. The savings came from lower debt balances, down to $23.5 million from $29.6 million during the same period last year.
Average gross margin improved 160 basis points, or 1.6 percentage points, to 21.7 percent from 20.1 percent the preceding year. Margin gained strength, the company said, because it has begun shipping merchandise that is benefiting from the removal of quota, and the completion of its transition out of U.S. manufacturing.
Costs were only slightly higher, inching up 20 basis points, or two-tenths of a percentage point, to 12.2 percent. Costs were down, the company said, “as a result of reductions in labor and commission expenses.”
Crown Crafts Inc.
|Qtr. 10/2 (x000)||2005||2004||% change|
|Oper. income (EBIT)||2,013||1,879||7.1|
|Per share (diluted)||0.05||0.04||25.0|
|Average gross margin||21.7%||20.1%||–|