Crown Crafts, Inc. (NASDAQ:CRWS) (“Crown Crafts” or the “Company”)
today announced that it has acquired the assets and business of
Carousel Designs, LLC, based in Douglasville, Georgia, in a
strategic transaction that immediately transforms the Company’s
online presence, providing a major sales channel for the Company
and enhancing its direct-to-consumer business.
Carousel Designs, a manufacturer and online
retailer of premium infant, toddler/kids’ bedding and nursery
décor, specializes in original and custom-designed baby bedding
sold directly to consumers through its babybedding.com
website. The site allows consumers to choose from among more
than 100 distinctive baby bedding collections, or create their own
customized products using the exclusive Nursery Designer® tool.
“We believe this business will be a strong
complement to our existing market leadership position as a
designer, marketer and distributor of licensed and branded infant
and toddler bedding products,” commented E. Randall Chestnut,
Chairman, President and Chief Executive Officer of the Company.
“By expanding our online and direct-to-consumer sales, we
will further diversify our customer base and gain new growth
opportunities in the online retail channel,” Chestnut
continued.
The transaction closed on August 4, 2017 and
includes a purchase price of $8.8 million in cash plus the
assumption of certain liabilities. Crown Crafts funded the
acquisition with cash on hand. Carousel Designs will be
operated as a wholly-owned subsidiary of the Company and is
expected to be immediately accretive to earnings. Carousel
Designs recorded net revenue of $7.7 million for the trailing
12-month period ended May 31, 2017. Jonathan Hartley and
Allan Sicat, Chief Executive Officer and President of Carousel
Designs, respectively, will remain in those same positions for the
new subsidiary of Crown Crafts.
“Our goal at Carousel Designs has always been to
provide expectant moms with the absolute best experience in
decorating their baby’s first room,” Hartley said. “As part
of Crown Crafts, we will be able to offer an even wider range of
design possibilities and products for our customers, and we will
continue to proudly manufacture products in the United States,”
Hartley continued.
Expecting parents can visit www.babybedding.com and
use the interactive Nursery Designer® tool to visualize how
different designs would look in their nursery by trying out
different components of the many available bedding and accessory
choices. Hartley and Sicat were inspired to create Nursery
Designer® when they saw how much their wives, both expecting their
first babies, enjoyed spending time in the design studio,
experimenting with fabrics and creating custom crib bedding for
their nurseries. They set out to develop a company that could
provide that same experience for any online customer.
In addition to Nursery Designer®, Carousel Designs
developed an innovative production process that gives it the
ability to offer custom design on a larger scale while supporting a
huge selection of fabrics, all without compromising quality and
attention to detail. Its proprietary technology and workflows
enable the production of customized products.
“We are extremely proud of the product and industry
innovations Carousel Designs has made in the last several years,”
Sicat said. “Our ability to integrate modern technology with
traditional manufacturing is our trademark in the industry, and
this move will enable us to reach an even broader range of
customers. We are thrilled to be a part of Crown Crafts and look
forward to future growth with this team,” continued Sicat.
According to a report prepared by IBISWorld, the
U.S. online baby products market has grown an estimated 11.8%
annually since 2011 and reached an estimated $6.2 billion in 2016.
Over the next five years, the market is projected to grow
7.3% annually to $8.8 billion, fueled by the rising acceptance and
convenience of online shopping and the recovery of disposable
incomes. With the acquisition of Carousel Designs and its
expertise in design, production and sales, and its trusted brand
known for providing premium and eco-friendly products, Crown Crafts
will be well positioned to capitalize on these market trends.
Chestnut added, “Carousel Designs has built a
unique business and an incredibly popular website that creates
great value for consumers who want to design their own personalized
look for their baby’s nursery. We believe it will be an
outstanding addition to Crown Crafts, and we will continue to look
for acquisitions that complement our business and offer new
opportunities for strategic growth.”
Conference Call
As previously announced, the Company intends to
release the results of its operations for the first quarter of
fiscal year 2018 before the market opens on Thursday, August 10,
2017. Mr. Chestnut and Olivia W. Elliott, Vice President and
Chief Financial Officer, will host a teleconference at 1:00 p.m.
Central Daylight Time on that day to discuss the Company’s results
and its acquisition of Carousel Designs and to answer appropriate
questions.
To join the teleconference, dial (844) 861-5504 and
ask to be joined into the Crown Crafts, Inc. call. The
teleconference can also be accessed in listen-only mode by visiting
the Company’s website at www.crowncrafts.com. A telephone
replay of the teleconference will be available one hour after the
end of the call through 4:00 p.m. Central Daylight Time on August
17, 2017. To access the replay, dial (877) 344-7529 in the
United States or (412) 317-0088 from international locations and
refer to conference number 10110847.
About Crown Crafts, Inc.
Crown Crafts, Inc. designs, markets and distributes
infant, toddler and juvenile consumer products, including crib and
toddler bedding; blankets; nursery accessories; room décor; burp
cloths; bathing accessories; reusable and disposable bibs; and
disposable placemats, floor mats, toilet seat covers and changing
mats. The Company’s operating subsidiaries consist of Crown
Crafts Infant Products, Inc. in California and Hamco, Inc. in
Louisiana, and now Carousel Designs, LLC in Georgia. Crown
Crafts is among America’s largest producers of infant bedding,
toddler bedding and bibs. The Company’s products include
licensed and branded collections, as well as exclusive private
label programs for certain of its customers. The Company’s
website is www.crowncrafts.com.
About Carousel Designs
Georgia-based Carousel Designs, a contemporary and
trend-setting leader in the baby bedding industry, was founded in
1988. For more than 29 years, Carousel Designs has
manufactured high quality baby bedding, toddler/kids’ bedding, and
nursery décor. Carousel Designs allows parents to design and
create their own virtual nursery online with their Nursery
Designer®, a unique, interactive design tool. The company
also offers more than 100 pre-designed crib bedding collections and
thousands of custom and personalized nursery bedding and décor
combinations. Products are sold online
at www.babybedding.com.
Forward-Looking Statements
The foregoing contains forward-looking statements
within the meaning of the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform
Act of 1995. Such statements are based upon management’s current
expectations, projections, estimates and assumptions. Words such as
“expects,” “believes,” “anticipates” and variations of such words
and similar expressions identify such forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties that may cause future results to differ materially
from those suggested by the forward-looking statements. These risks
include, among others, the inability of the Company to achieve the
anticipated benefits of the Carousel Designs acquisition or to
successfully integrate the acquired business, or to do so within
the expected timeframes; revenues following the transaction may be
lower than expected; operating costs, customer loss and business
disruption (including difficulties in maintaining relationships
with employees, customers and suppliers) may be greater than
expected; competitive pressures on product pricing and services;
general economic conditions, including changes in interest rates,
in the overall level of consumer spending and in the price of oil,
cotton and other raw materials used in the Company’s products;
changing competition; changes in the retail environment; the level,
timing and pricing of future orders from the Company’s customers;
the extent to which the Company’s business is concentrated in a
small number of customers; the Company’s dependence upon
third-party suppliers, including some located in foreign countries;
customer acceptance of both new designs and newly-introduced
product lines, actions of competitors that may impact the Company’s
business; disruptions to transportation systems or shipping lanes
used by the Company or its suppliers; and the Company’s dependence
upon licenses from third parties. Reference is also made to the
Company’s periodic filings with the Securities and Exchange
Commission for additional factors that may impact the Company’s
results of operations and financial condition. The Company does not
undertake to update the forward-looking statements contained herein
to conform to actual results or changes in our expectations,
whether as a result of new information, future events or
otherwise.
Contact:
Olivia W. Elliott
Vice President and Chief Financial Officer
(225) 647-9124
oelliott@crowncrafts.com
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