Crown Crafts 3Q a long, hard slog
November 13, 2003-- Home Textiles Today,
Gonzales, La — With sales tumbling by more than 20 percent, hurt by a sluggish economy and big shifts in customer buying patterns, second-quarter profits were slashed by more than half at Crown Crafts Inc., falling to $924,000 from $2.1 million last year.
Sales at the big producer of infant and juvenile products dropped 22.5 percent, to $22.0 million from $28.4 million last year. Providing some relief to the bottom line, the company continued to hack away at operating costs and interest expense. Expenses were pared by 18.2 percent, to $2.8 million from $3.5 million a year ago, generating a cash savings of $630,000. Interest expense was rolled back by 13.0 percent, to $1.0 million from $1.2 million, a further savings of $154,000. The lower interest costs resulted from a lower average debt balance and reduced interest rates.
But partially offsetting lower costs was substantial margin erosion, the direct result, the company said, of the lower level of sales. Average gross margin narrowed by 170 basis points, or 1.7 percentage points, to 22.1 percent from 23.8 percent. Gross margin dollars fell by 28.0 percent, to $4.9 million from $6.8 million.
Sales, the company said, were hit by a losing trifecta of a sluggish economy; inventory reductions at retail; and a tough comparison with a year-ago quarter when the company rolled out substantial new product programs.