Company: CRWS
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001437749-25-026346
Chunk: 15

Company: CROWN CRAFTS INC
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 3
Chunk 15
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
For a discussion of market risks that could affect the Company, refer to the risk factors disclosed in Item 1A. of Part 1 of the Company’s Annual Report on Form 10-K for the year ended March 30, 2025.
 
INTEREST RATE RISK
 
As of June 29, 2025, the Company had $13.9 million of indebtedness that bears interest at a variable rate, comprised of borrowings under the revolving line of credit and a term loan. Based upon this level of outstanding debt, the Company’s annual net income (loss) would decrease (increase) by approximately $108,000 for each increase of one percentage point in the interest rate applicable to the debt.
COMMODITY RATE RISK
 
The Company sources its products primarily from foreign contract manufacturers, with the largest concentration being in China. The Company’s exposure to commodity price risk primarily relates to changes in the prices in China of cotton, oil and labor, which are the principal inputs used in a substantial number of the Company’s products. In addition, although the Company pays its Chinese suppliers in U.S. dollars, a strengthening of the rate of the Chinese currency versus the U.S. dollar could result in an increase in the cost of the Company’s finished goods. There is no assurance that the Company could timely respond to such increases by proportionately increasing the prices at which its products are sold to the Company’s customers.
MARKET CONCENTRATION RISK
 
The Company’s financial results are closely tied to sales to its top two customers, which represented approximately 66% of the Company’s gross sales in fiscal year 2025. In addition, 50% of the Company’s gross sales in fiscal year 2025 consisted of licensed products, which included 21% of sales associated with the Company’s license agreements with affiliated companies of the Walt Disney Company.  The Company’s results could be materially impacted by the loss of one or more of these licenses.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.