Crown Crafts (NASDAQ:CRWS) reported a significant increase in third-quarter net income despite a contraction in its top line, as a substantial insurance payout and aggressive cost-cutting measures provided a financial safety net.
The Gonzales, Louisiana-based producer of infant and toddler products posted net income of $1.5 million for the quarter ended December 28, 2025, up from $0.9 million in the same period last year.
The quarterly performance was heavily influenced by $2.5 million in insurance proceeds related to a representation and warranties policy from a previous acquisition.
This windfall contributed a $2.1 million pre-tax benefit, effectively masking a challenging retail environment.
Net sales for the quarter fell 11.5% to $20.7 million, while gross margins slipped to 23.5% from 26.1% a year ago, primarily due to the ongoing impact of elevated import tariffs and a shift in product mix.
To counter these headwinds, CEO Olivia Elliott has initiated a "Revival" of the company’s internal operations, including a $0.6 million severance charge tied to operational consolidation.
"We are navigating an environment marked by uneven consumer spending," Elliott said.