Crown Crafts investors contentious in quarterly call
-- Home Textiles Today, 11/11/2009 12:43:00 PM
Gonzales, Louisiana – There were only four equity firms asking questions during today’s Crown Crafts quarterly conference call, but three of them were pointed in expressing their dissatisfaction with the company’s outlook.
Their questions seemed to indicate a belief– at one point stated explicitly – that Crown Crafts would generate better return for them by privatizing.
“If you can’t grow this company without making acquisitions, then, essentially you owe it to the outside shareholders to take the company private at a fair price and take on that risk and take on the leverage. That’s how it works,” said Nelson Obus from Wynnefield Capital.
Crown Crafts has gone its rounds with Wynnefield in the past, ultimately giving it a seat on the board in 2008 to stave off a proxy fight. The equity firm at the time was calling for an independent strategic review.
Bobby Melnick from Terrier Partners also took issue with Crown Crafts’ direction. “You’ve been very rigid in your belief that Crown Crafts can continue independently, and it just seems with each incremental data point that that’s a tougher, harder position to espouse,” he said.
Goldsmith & Harris’ Arnold Brief also questioned management’s assertion that its core blanket and bedding products business had not lost market share after Crown Crafts’ chief Randall Chestnut asserted that the pie had simply shrunk.
Questions were also raised about how Crown Crafts could continue to compete in a transformed environment of retail giants.
“We are nimble, and that helps in many cases. And we can move quicker than some of our competitors. We can maneuver on a dime, and we think that helps us,” said Chestnut, chairman, president and ceo. “We do believe that we’ve done the right things for the future, and we’ll be well positioned when the economy does recover. We’re at the right retailers with the right product, the right design and the right brands.”
Net income for the second quarter was $803,000, or 8 cents per share, down 27.3% from $1.0 million, or 11 cents per share last year.
Sales fell 19.1% to $21.7 million.
Chestnut cited the weak sales environment and retailers’ commitment to continue holding inventories low as factors impacting the business.
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