Crown Crafts Cutting Costs

By Don Hogsett -- Home Textiles Today, 2/14/2005 12:00:00 AM

Gonzales, La. — —

Gonzales, La. — Helped by continued aggressive cost-cutting, which offset modestly thinning margins, third fiscal quarter earnings at Crown Crafts Inc. climbed 24.4 percent, to $918,000 from $738,000 during the same period a year ago.

Sales at the supplier of infant's and juvenile products were relatively flat, slipping three-tenths of a percent, to $20.66 million from $20.72 million a year ago.

In a lift to the bottom line, and offsetting thinning margins, Crown kept hacking away at costs. The company has been working at cost reduction in the years since its sweeping restructuring and overhaul of operations, including the spin-off of its adult bedding business and a move to Louisiana from more costly headquarters in Atlanta. Costs were whittled 80 basis points, or eight-tenths of a percentage point, to 13.1 percent of sales from 13.9 percent during the same period last year. Measured in absolute dollars, costs were pared 6.1 percent, to $2.7 million from $2.9 million, yielding a cash savings of $176,000.

But average gross margin continued to thin, declining 40 basis points, or four-tenths of a percentage point, to 21.3 percent from 21.7 percent the preceding year. “As quotas from China are being eliminated, pricing pressures are driving margins down,” said E. Randall Chestnut, chairman, president and CEO.

Additionally, said Chestnut, “Direct-to-retail licenses, which have been in effect through much of fiscal year 2005, have deflated top-line gross sales and continue to affect margins negatively.”

Crown Crafts Inc.