Crown Crafts reported Q1 2026 net sales of $15.48 million, down 4.5% year-over-year, as the company faced persistent tariff-related cost pressures and planned inventory reductions to mitigate tariff exposure. Gross profit declined to $3.52 million, yielding a gross margin of 22.7%, down 1.8 percentage points from the year-ago period, driven largely by tariff costs tied to Chinese-sourced goods. The quarter produced a GAAP net loss of $1.10 million ($0.10 per diluted share) and an operating loss of $1.13 million, reflecting elevated SG&A costs from the Baby Boom acquisition and higher advertising spend. Notably, the company generated positive operating cash flow of $5.25 million and ended the quarter with modest liquidity ($0.23 million cash on hand) but a sizable inventory position of $31.6 million. Crown Crafts maintains a disciplined approach to managing tariffs via price increases to be implemented through July–September, and management remains focused on long-term strategic initiatives, including the Disney license extension to Canada, the Baby Boom portfolio, and the integration of Manhattan Toy, which management believes should support growth and market share expansion. The balance sheet shows total debt of $26.0 million and net debt of approximately $25.8 million, with $12.2 million available under the revolving credit facility, highlighting a path to liquidity improvement as operations rebound and inventory cycles normalize. The company declared an $0.08 per share dividend, underscoring a continuous capital return policy as it navigates a challenging near-term backdrop.