Crown Crafts — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Net sales for the quarter ended September 27, 2026, were $19.0 million, a decrease from $23.7 million in the prior-year quarter.
• Gross profit was $6.1 million compared to $6.6 million in the prior year, resulting in a gross profit margin of 32.0% versus 27.7% in the prior year.
• Adjusted gross margin was 30.9%, an increase of 320 basis points year-over-year, excluding $0.4 million in tariff refunds and $0.2 million in severance expense.
• Net income increased to $1.3 million ($0.12 per diluted share) from $1.2 million ($0.11 per diluted share) in the prior-year quarter.
• Marketing and administrative expenses decreased to $4.5 million from $4.7 million in the prior-year period.
• For the six-month period ended September 27, 2026, net sales were $35.8 million compared to $39.2 million in the prior year, while net income was $3.4 million compared to $53,000 in the prior year.
• Cash and cash equivalents increased to $426,000 from $200,000 as of March 29, 2026.
• Long-term debt decreased significantly to $3.3 million from $12.1 million as of March 29, 2026.
• Total shareholders' equity increased to $41.4 million from $38.8 million as of March 29, 2026.

Guidance and Future Outlook:

• Management expressed confidence in continued progress on longer-term initiatives, including warehouse consolidation.
• The company is focused on developing additional higher-margin products and sales channels to grow sales and profitability in future quarters.
• Management noted that improved profitability and stronger cash flow are encouraging and have facilitated significant debt reduction.

Business Segments and Product Lines:

• The company operates through wholly owned subsidiaries NoJo Baby & Kids, Inc. and Sassy Baby, Inc., marketing products under trademarks including Sassy®, NoJo®, Manhattan Toy®, Baby Boom®, and Neat Solutions®.
• Strong sales were attributed in large part to the warm reception for Groovy Girls in Canada.
• The company designs, markets, and distributes infant, toddler, and juvenile consumer products including bedding, diaper bags, bibs, toys, and disposable products.

Market and Competitive Landscape:

• Sales channels include mass merchants, large chain stores, juvenile specialty stores, value channel stores, grocery and drug stores, wholesale clubs, internet-based retailers, and direct-to-consumer websites.
• The company faces risks related to changing competition and the retail environment, as noted in forward-looking statements.

Risks and Challenges:

• Risks include general economic conditions, increased U.S. tariffs and retaliatory measures, changes in interest rates, and fluctuations in consumer spending.
• Potential challenges involve changes in the price of raw materials such as oil, cotton, and others used in products.
• Risks also include dependence on a small number of customers, third-party suppliers (including foreign locations), and third-party licenses.
• Forward-looking statements note risks regarding disruptions to transportation systems, shipping lanes, and customer acceptance of new designs.

Management Commentary and Tone:

• Olivia Elliott, President and Chief Executive Officer, stated the company is executing well on profitability initiatives with meaningful improvements in gross profit, marketing and administrative expenses, and year-to-date operating cash flow.
• Management highlighted that the team is energized by Crown Crafts' strong positioning and opportunities to enhance shareholder value.
• The tone reflects confidence in the company's ability to mitigate tariff impacts and continue reducing debt while maintaining dividend payments.

Other Key Points:

• The Board of Directors declared a quarterly cash dividend of $0.03 per share on Series A common stock, payable on January 4, 2027, to stockholders of record on December 11, 2026.
• Tariff refunds totaling $0.4 million for the quarter and $4.2 million for the six-month period were recorded to cost of products sold following a U.S. Supreme Court ruling on February 20, 2026, which deemed the tariffs illegal.
• A severance expense of $0.2 million was recorded during the quarter.
• The company hosted a teleconference on November 12, 2026, to discuss results, with a replay available through November 26, 2026.