Company: CRWS
Filing Date: 2025-02-12
Form Type: 10-Q
Source: 0001437749-25-003486
Chunk: 5

Company: CROWN CRAFTS INC
Filing Date: 2025-02-12
Form: 10-Q
Item: Part I, Item 2
Chunk 5
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 December 31, 2023 to 26.6% of net sales for the nine-month period ended December 29, 2024. The decrease in the gross profit percentage is considered to be materially consistent with the prior period and primarily relates to an increase in rent at our Compton facility.

Marketing and Administrative Expenses: Marketing and administrative expenses increased by $290,000 and increased from 17.3% of net sales for the three-month period ended December 31, 2023 to 18.8% of net sales for the three-month period ended December 29, 2024. The current year period includes $186,000 in acquisition costs as well as increased marketing and administrative costs associated with the Acquisition.

Marketing and administrative expenses increased by $1.9 million and increased from 18.7% of net sales for the nine-month period ended December 31, 2023 to 22.0% of net sales for the nine-month period ended December 29, 2024. The current year period includes $244,000 associated with the closure of the Company’s subsidiary in the United Kingdom and $1.1 million in costs associated with the Acquisition.

11

Income Tax Expense: The Company’s provision for income taxes is based upon an estimated annual effective tax rate (“ ETR”) from continuing operations of 22.4% for the nine-month period ended December 29, 2024, as compared with an estimated annual ETR from continuing operations of 21.4% for the nine-month period ended December 31, 2023.

As a result of the consideration of relevant information regarding its income tax provision, the Company recorded discrete reserves for unrecognized tax liabilities of $46,000 and $9,000 during the three-month period ended December 29, 2024 and December 31, 2023, respectively, and $49,000 and $34,000 during the nine-month period ended December 29, 2024, and December 31, 2023, respectively, in the unaudited condensed consolidated statements of income.

The Company recorded discrete income tax charges of $34,000 and $43,000 during the nine-month periods ended December 29, 2024 and December 31, 2023, respectively, to reflect the effects of the tax shortfalls and excess tax benefits arising from the forfeiture and expiration of stock options and the vesting of non-vested stock. The Company recorded discrete income tax charges of $50,000 and