Company: CRWS
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001437749-25-034222
Chunk: 2

Company: CROWN CRAFTS INC
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 1
Chunk 2
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5 and  September 29, 2024, respectively.   Note 4 – Concentrations
   Product Sourcing: Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China. The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties. Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products  may be readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.   The Company maintains foreign representative offices located in Shanghai and Shenzhen, China, which are responsible for the coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social compliance and quality. The Company’s management and quality assurance personnel visit the third-party facilities regularly to monitor and audit product quality and to ensure compliance with labor requirements and social and environmental standards. In addition, the Company closely monitors the currency exchange rate. The impact of future fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty.   For the period ended  September 28, 2025, purchases from the Company’s three largest suppliers accounted for approximately 16%, 11% and 11% of purchases. To mitigate the risks associated with supplier concentration, the Company engages in ongoing efforts to identify alternative sources of supply, assess supplier reliability and performance, and negotiate favorable contractual terms where feasible. However, there can be no assurance that the Company will be successful in reducing its dependence on any single supplier or mitigating the impact of supplier-related risks in the future.   The U.S. government has tariffs on imports from certain countries, including China. During 2025, the U.S. government introduced increased tariffs which have increased the cost of the products the Company sources from China and affected shipments from the Company’s Chinese-based suppliers. The Company is evaluating the potential impact of the imposition of new tariffs on imports from China to the Company’s business and financial condition. The impact of the increased tariffs is uncertain because it is subject to a number of factors, including the duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that China  may take and any mitigation actions that  may become available.       6
  
  Licensed Products: Certain products are manufactured and sold pursuant to licensing agreements for trademarks. Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company