Crown Crafts Stock Up Post Q2 Earnings as Profit Rises Despite Tariffs

Shares of Crown Crafts, Inc. CRWS have gained 5.7% since the company released its results for the quarter ended Sept. 28, 2025, outperforming the S&P 500 Index’s 1.9% decline over the same period. However, over the past month, the stock lost 3.1%, lagging the S&P 500’s 0.1% rise.CRWS’ Earnings SnapshotCrown Crafts’ second-quarter fiscal 2026 results showed mixed top-line performance but stronger earnings. Net sales declined 3.1% to $23.7 million from $24.5 million a year earlier, weighed down by a 13.2% drop in bedding and diaper bag sales. This was partially offset by a 6.6% increase in bibs, toys and disposable products, reflecting broad gains across retailers.Despite lower revenue, net income rose 34.5% to $1.2 million, or $0.11 per share, from $0.9 million, or $0.08 per share, driven by a 13.6% reduction in marketing and administrative expenses to $4.7 million from $5.4 million in the prior-year period. Gross margin slipped to 27.7% from 28.4% due to higher tariff costs on China-sourced goods.Crown Crafts’ Operational Performance and Other Key MetricsManagement emphasized that elevated tariffs and supply-chain volatility continued to weigh on margins. CEO Olivia Elliott noted during the earnings call that the tariff environment continued to drive costs and pressure margins, though Crown Crafts remains encouraged by ongoing U.S.–China trade discussions. Inventory ended the quarter at $32.6 million, consistent with seasonal patterns and slightly above fiscal year-end levels. Cash increased to $0.8 million as of Sept. 28, 2025, from $0.5 million as of March 30, 2025, while total indebtedness stood at $16.3 million with $13.7 million available on the credit line.Segment-specific dynamics varied. Bedding and diaper bags were the lone weak spot, hurt by fewer items in a major retailer’s program and by continued margin strain in diaper bags tied to tariffs. Meanwhile, toys and bibs performed well across multiple retailers and benefited from stronger international demand. International sales — particularly in Europe — were cited as a bright spot for both the Sassy and Manhattan Toy brands.Crown Crafts, Inc. Price, Consensus and EPS Surprise Crown Crafts, Inc. price-consensus-eps-surprise-chart | Crown Crafts, Inc. QuoteCRWS’ Management CommentaryElliott highlighted CRWS’ ability to expand earnings despite a challenging backdrop, pointing to disciplined cost controls and ongoing integration of last year’s acquisition. She emphasized that while advertising expenses increased, they remain essential to building brand presence, especially for Manhattan Toy products. CFO Claire Spencer reiterated that the improved bottom line was primarily the result of lower marketing and administrative costs compared with last year’s acquisition-related expenses.Management also expressed confidence in product development efforts. The redesigned Stella doll — boosted by media attention following a high-profile purchase — continues to perform well in specialty channels. Meanwhile, the ring stacker toy remains Crown Crafts’ top-selling SKU worldwide, with strong Amazon sales.Factors Influencing Crown Crafts’ Quarterly ResultsTariffs remained the biggest headwind, particularly for diaper bags, prompting Crown Crafts to search for suppliers outside China to restore category profitability. The company also continued to navigate fluctuating retailer program resets, which affected inventory timing and product availability. Despite these pressures, broad gains across toy and bib categories helped offset softness elsewhere.Higher advertising spending, while dilutive to near-term margins, reflects a strategic decision to strengthen long-term sales momentum — especially for the Manhattan Toy brand in both domestic and international markets. Growth in Europe, aided by new distributors signed at the K&J show in Germany, contributed meaningfully to the segment’s recent strength.CRWS’ GuidanceCrown Crafts did not issue formal quantitative guidance for fiscal 2026. Management did, however, acknowledge continued macroeconomic uncertainty, particularly related to tariffs and global supply-chain conditions. Still, they expressed optimism about long-term growth opportunities and the potential for improved profitability as cost-reduction measures take hold.Crown Crafts’ Other DevelopmentsAfter the quarter ended, Crown Crafts began consolidating internal operations across its two subsidiaries — NoJo and Sassy — to eliminate redundant costs. This restructuring includes merging sales and design teams and reducing duplicate IT contracts, a process expected to yield increasing savings as vendor agreements expire over the coming quarters. While CRWS has not yet quantified expected savings, management plans to refine estimates during fiscal 2027 budget planning early next year.Additionally, Crown Crafts declared a quarterly dividend of $0.08 per share payable Jan. 2, 2026, continuing its policy of returning capital to shareholders.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Crown Crafts, Inc. (CRWS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks