Impairment charge pushes Crown Crafts into 4Q loss
June 29, 2009-- Home Textiles Today,
Gonzales, La. – Crown Crafts today reported a net loss of $10.6 million, or $1.15 per diluted share for the fourth quarter.
The results included a non-cash, pre-tax charge of $13.9 million for an impairment to goodwill, an evaluation spurred by a decline of the company’s market capitalization. Excluding the charge, the manufacturer of infant textiles and home furnishings would have generated a profit of $2.0 million, or 21 cents per share for the period ended March 29 – up 25% from the $1.6 million profit Crown Crafts produced in last year’s fourth quarter.
Sales were relatively flat -- $24.6 million, up 2.5%.
“We had a good year,” chairman, president and ceo Randall Chestnut told analysts during the company’s quarterly conference call this afternoon. “We feel we are on solid footing.”
Crown Crafts increased its cash position from $7.9 million as of March 30 last year to $15.2 million as of March 29 this year as management opted to build reserves rather than pay down the company's revolving line of credit.
“We remain convinced that despite the difficult economic environment, our business model and our strong cash flow will keep us in an excellent competitive position to manage through this economic downturn and subsequently benefit from the economy's recovery,” said Chestnut.
Crown Crafts saw retailers cutting back heavily on inventories during the calendar-year fourth quarter, then begin to expand orders in the new year, he said.
For the fiscal year, the company reported a net loss of $17.1 million, or $1.83 per share compared to a profit last year of $4.4 million, or 43 cents per share. Excluding the impact of the $22.9 million non-cash goodwill impairment charge for the full year, net income would have been $4.7 million, or 47 cents per share.
Sales for the year rose 16.7% to $87.4 million.
Of note during the year, Crown Crafts “spent a fair amount of money” setting up an office in China, a process that did not proceed as smoothly as anticipated. But the company has resolved the matter, he indicated.
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