Good day, and welcome to the Crown Crafts, Inc. Fourth Quarter and Fiscal Year 2025 Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Matt Hodges with Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining the Crown Crafts Fourth Quarter and Fiscal 2025 Conference Call. Joining me on the call today are Crown Crafts' President and CEO, Olivia Elliott; CFO, Craig Demarest; and Vice President, Claire Spencer, who will be CFO upon Craig's retirement next week. During today's call, the company may make certain forward-looking statements, and actual results may differ materially from those expressed or implied. These statements are subject to risks and uncertainties that may be beyond Crown Crafts' control, and the company is under no obligation to update these statements. For more information about the company's risk factors and other uncertainties, please refer to the company's filings with the Securities and Exchange Commission. Now I'd like to turn the call over to President and CEO, Olivia Elliott.

Thank you, Matt. Good morning, everyone. Fiscal 2025 turned out to be a transitional year for the company, much like 2024, but for different reasons. Persistent inflation caused consumers to pull back on discretionary spending throughout the year, resulting in total sales for the fiscal year being slightly below last year. We, along with others who import from China, also experienced a slowdown in sales due to uncertainty around the United States tariff policy. However, as part of our long-term strategic plan, we continue looking for innovative ways to strengthen our market position. This led us to acquire the assets of Baby Boom Consumer Products, which added diaper bags to our portfolio of products, as well as several popular brand licenses such as Bluey and Ms. Rachel. This was our second major acquisition over the last 2 years as we continue to expand our product offerings to drive future growth, both domestically and internationally. From an operations perspective, we have worked diligently to take out unnecessary cost to maintain acceptable margins and profits. Overall, we remain financially healthy, with adequate cash at year-end and total inventories less than last year. Our cash flow for the year was $9.8 million, providing us the ability to pay regular dividends and service debt. Finally, I would like to introduce the newest member of our team, Claire Spencer. Claire joined Crown Crafts on June 16 and, as Matt mentioned, will become CFO on June 30.

Thank you, Olivia. I'm very excited to join Crown Crafts and have the opportunity to lead the finance and accounting team to support the company's financial and strategic goals and drive shareholder value.

Welcome, player. We're excited to have you join our team. Before I turn it over to Craig to walk through the financials in more detail, I would like to thank him for his leadership, hard work and dedication to helping us achieve our goals. The entire Crown Crafts team wishes him a very happy retirement.

Thank you, Olivia. It's been a pleasure working with you, the Crown Crafts team, the Board of Directors and all of our shareholders over the last 4 years. I'll begin with a look at the fourth quarter results and then provide some color on the full year results. Fourth quarter net sales were $23.2 million, a 2.9% increase compared to the prior year quarter. The increase was driven by strong sales of Baby Boom products, partially offset by a decline in sales of bibs, toys and disposable products. Gross profit for the quarter was 18.3% compared to 23.2% in the fourth quarter of fiscal '24. The margin decrease is primarily related to the impact of higher tariffs, increased rent at our Compton facility, an increase in royalty expense resulting from the Baby Boom acquisition and higher closeout sales at lower margins as we continue to lower our inventory levels. Marketing and administrative expenses during the quarter increased 17% year-over-year, driven by increased advertising costs and the expenses associated with the Baby Boom business. GAAP net loss for the fourth quarter was $10.8 million or $1.04 loss per diluted share. GAAP net loss was the result of a $13.8 million goodwill impairment charge resulting from the prolonged decline in our market capitalization, indicating a decline in the fair value of our goodwill reporting units. Following the impairment charge, we have no goodwill in our balance sheet at March 30, 2025. Adjusted net loss was $429,000 or adjusted diluted loss per share of $0.04. Turning now to our results for the full year. Net sales for fiscal '25 were $87.3 million compared to $87.6 million in the prior year. As Olivia mentioned earlier, sales were impacted by consumers pulling back due to economic conditions. However, we did see the addition of $11.9…

Thank you, Craig. Over the last couple of years, the economy has been a headwind for consumers and, ultimately, Crown Crafts. During this time, we have taken several steps forward to position the company for long-term success when the economy starts to improve. We've added more products to our portfolio through acquisition and our own internal product development. We've added more of the most popular and trending brands through acquisitions or by expanding the depth of our product catalog. We continue to have good working relationships with our major retail partners, and we have expanded our e-commerce capabilities. I would like to thank our team for their resilience and all the hard work they have put into integrating our acquisitions, finding opportunities to cut costs and for their commitment to making Crown Crafts one of the leading producers of infant, toddler and juvenile consumer products. As we begin fiscal 2026, our most pressing challenge is navigating the impact of tariffs. As of now, the goods we order will incur an additional 30% tariff. We are working with our manufacturers and our retail partners to absorb a portion of this amount, and we are also looking at other ways to mitigate additional tariff expenses. We will continue to explore ways to increase sales and gain market share. This includes product and channel expansions. In closing, I would like to thank our shareholders for your support, and we look forward to updating you on our progress throughout the year. With that, I'd like to open the line for questions.

[Operator Instructions] Today's first question comes from Doug Ruth at Lenox Financial Services.

First, I would like to thank Craig for what he has done for the shareholders. I thought you did a really nice job with the reporting, and I want to wish you well in your retirement. And I also wanted to welcome Claire to the team. Looking forward to seeing what -- how you're able to increase shareholder value.

Thank you, Doug. Appreciate it.

Can you give us -- Olivia, can you give us an update on where things are with the warehouse at this point?

So we're still exploring pretty much every option that we can think of. But with tariffs, we've kind of put that on the -- for the last few months, we've been focused on tariffs and not really on the warehouse, but we're still exploring those options.

Do you still think you'll make a decision sometime here in fiscal 2026?

I hope so. We're probably slowing down on the time line for actual moving, but I think we will make some decisions in the near future.

Okay. I understand that you went to the New York toy show that was held in March. I was wondering, how did the show go for the company?

So yes, we had a lot of our sales and product development team that attended toy fair. I think they had a lot of really good traffic and some good feedback on the new products that we showed, and they actually wrote some orders, but it's not really common to write orders at the show anymore with just the EDI capabilities, et cetera. So from what I understand, everything went well, and the products that we intend to -- the new products showed very well.

And then I know that one thing that is featured on the website is the Stella doll -- a new Stella doll. And then I understand that Meghan Markle had purchased a doll for her daughter. Are you able to comment on how the -- what's happening with the Stella doll and the redesign and any kind of sell-through?

Yes. And so we redesigned what was called Stella and Wee Baby Stella, and now we have a new Love, Stella line that includes a newborn doll. Before, the product started more at maybe the toddler age range. And so now we've got a newborn doll. We've redesigned the toddler doll so that it sits up better. And yes, Meghan Markle did include our Stella doll on one of her shows, and it certainly helped with a lot of the marketing and the advertising and the social media.

Okay. Then I understand that the world's largest LEGOLAND is going to open in Shanghai on July 5. And I was wondering if that creates some opportunity for -- will Crown Craft be providing some of the Star Wars plush animals for that -- plush figurines for that location?

Yes. So they had a soft opening. I believe -- I can't remember if it was in late May or early June. And from what I understand, the soft opening went very well, and we are supplying the plush for that park.

And then were the sales to -- were Crown Crafts sales to LEGOLAND, did they increase in fiscal 2025 versus fiscal 2024?

2025 versus '24, yes. I think that the changeover, so I don't know if you recall that they were only going to allow the LEGO-branded plush into the parks. Taking -- it used to be us and then a couple of other competitors. And so we had some form of a transition throughout this year, but it has gone slower than we expected. But we expect that in the near future, we'll be the only plush in the park.

Okay. And then you had also talked in the past about the diaper bags that there might be opportunities with possibly some new brands. Is there any development there?

Yes. We're still working on that. We've got a lot of excitement from some of our licensing partners that want us to do some licensed diaper bags. To be frank, the tariffs are hitting the diaper bags harder than anything. So we're trying to look at opportunities to keep those costs within reason so that we can expand that further.

At one time, you had talked about a potential tax credit for importing products for children or for babies. Is there any update on that at all?

I think are you talking about the tax credit for parents, maybe, not really for us reporting?

The tax credit for parents, all right. Yes, for -- like for babies, and would that apply to diaper bags?

I haven't heard if that went through or if that's part of the final plan, but there was some talk at some point about giving parents -- new parents a tax credit, yes.

Okay. And then how about the distribution in Europe using the distributor instead of the direct sales force, is that helping the company?

Yes. It takes some time to get all of the new products flowing through the distributors. But I think at the end of the day, we're anticipating our international sales to continue to go up.

And my last question is, how about the Manhattan Toy website, the redesign there? Are you -- is that -- has that made a difference for the company?

I think so. I mean it's much easier to shop on the website. I think we've got a much better visual that's updated. And I think that we're doing a good job of driving more people to the website through our social media post, et cetera.

Very good. That's nice to hear that. And all the best to you, Craig.

Thanks so much, Doug.

[Operator Instructions] Our next question comes from [ David Woodyatt ], a private investor.

Yes. My questions have been answered. Thank you.

And this does conclude our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks.

Thank you. We'd like to thank you for your continued support of Crown Crafts, and we look forward to updating you on our Q1 earnings, which will be in mid-August. Thank you very much.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.