Gonzales-based baby products maker Crown Crafts Inc. has boosted its online presence with an $8.8 million acquisition of Douglasville, Georgia-based Carousel Designs LLC.
Carousel Designs is a manufacturer and online retailer specializing in original and custom-designed baby bedding sold directly to consumers through babybedding.com. Crown described the acquisition of Carousel as transformative.
Tulane University Finance Professor Peter Ricchiuti, who tracks publicly traded regional companies through the school's Burkenroad Reports, said the description fits.
Crown will be able to take babybedding.com's expertise and apply it to Crown's products and sales. Those products really lend themselves to online purchases.
"Additionally, it may silence the criticism investors sometime have about the company being overly reliant on just a few retailers," Ricchiuti said. "This will spread out the business and allow the company to sell more product directly to consumers."
Crown depends heavily on two customers, Wal-Mart Stores Inc. and Toys R Us, who account for more than 60 percent of annual sales.
For the 2017 fiscal year, Crown's sales plummeted nearly 22 percent to $66 million. The company's profit fell to $5.6 million, or 56 cents per share, compared to $6.8 million, or 68 cents per share, a year earlier.
Carousel Designs recorded net revenue of $7.7 million for the 12-month period ended May 31. Crown Crafts funded the acquisition with cash on hand.
"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," Crown Chairman, President and CEO E. Randall Chestnut said. "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."
Carousel Designs will be operated as a subsidiary and is expected to immediately add to Crown's earnings.
Ricchiuti said Crown's shares have fallen about 50 percent in the past 12 months.
The stock market is taking the news as "a ho-hum event" and probably won't reevaluate Crown until investors see a quarter or two of synergy and improving results, he said.
Carousel was established 29 years ago. Babybedding.com 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.
CEO Jonathan Hartley and President Allan Sicat will remain in those positions for the subsidiary.
The acquisition is Crown's second major announcement in as many weeks. Six days ago, Crown announced it will market and distribute a new line of infant bedding, blankets, bibs and bath products bearing talk show host and Metairie native Ellen DeGeneres' ED brand name.