Crown Crafts, Inc.
Crown Crafts, Inc.
Crown Crafts, Inc.
Incorporated: 1957 as Janyjo, Inc.
Sales: $211 million (1995)
Stock Exchanges: New York
SICs: 2211 Broadwoven Fabric Mills, Cotton; 2221 Broadwoven Fabric Mills, Manmade Fiber & Silk; 2392 House Furnishings, Not Elsewhere Classified
Crown Crafts, Inc. designs, manufactures, and sells bed covering products and related accessories, including comforters and various jacquard-woven and other textile goods. Its products are marketed under several brand names including Crown Crafts, Goodwin Weavers, Royal Sateen, Ungaro, Bob Timberlake, Perry Ellis, and Colonial Williamsburg. Crown Crafts operated for several years as a relatively small manufacturer of bedspreads and crushed velvet products until the mid-1980s, when it began acquiring other companies.
Modest 1950s Beginnings
The company that would become Crown Crafts started out in 1957 as a small manufacturer of bedspreads. Incorporated as Janyjo—the company would change its name to Crown Crafts in 1968—the enterprise became one of many textile producers based in and around the Calhoun, Georgia, area. Janyjo was moderately successful during most of the 1960s as a small but profitable maker of tufted bedspreads, and gradually expanded into other textiles and accessories. In 1967, for example, it added jacquard-woven bedspreads to its product line. Jacquard-woven products, weaved on a special “Jacquard” loom, could allow for more intricate patterns in the fabric, and Crown Crafts’ jacquard-woven line would later prove pivotal to the company’s growth.
Growth and Diversification in the 1970s
Even more important to the company during the 1970s, however, was its line of crushed velvet goods. Indeed, flocked (crushed velvet) fabrics became hugely popular during the 1970s, and Crown Crafts aggressively targeted that growth market, investing heavily in equipment necessary to manufacture velvet bedspreads, draperies, and related goods. Crown Crafts became a leader in its niche, and its tufted and jacquard-woven goods became secondary to its core of flocked product lines. To fund expansion, Crown Crafts borrowed about $4.5 million in the mid-1970s from Prudential and used the cash to expand its production capacity. As sales of its then-popular crushed velvet materials soared, Crown Crafts’ revenues grew. By the early 1980s the company was generating more than $20 million in annual sales.
Economic Downturn and Recovery
Crown Crafts’ sales peaked at $22.9 million in 1982. Guided by savvy management since its inception, the company had never posted a loss and its future looked bright. Unfortunately, the market for flocked goods began to wane in 1982 before plunging in 1983. Within a few years, in fact, the flocked goods market withered to almost nothing. Crown Crafts was left reeling by the sudden shift in consumer tastes. The company suddenly found itself a leader in a market for a product that had, like the leisure suit, become an amusing relic of 1970s fashion. The company’s revenues dropped more than 20 percent in 1983, to just $18.3 million, and Crown Crafts was forced to post its first loss, of $338,000.
Crown Crafts was in financial trouble by 1983. With both profits and cash flow in rapid decline, management feared that the company would be unable to cover its debt obligations. Rather than force Crown Crafts to liquidate assets to pay of its loan, however, Prudential agreed to loan $4 million more to Crown Crafts to help it shift into a new line of business. Crown Crafts had already identified bed comforters as a potential growth market for the 1980s. To that end, in 1982 it had started to sell a line of tufted chenille comforter products as part of an effort to supplant lagging velvet sales. The comforters were manufactured for Crown Crafts by Decorator Comforters, a Roxboro, North Carolina-based producer of padded quilts used as bedspreads. In 1984, Crown Crafts used cash from the $4 million loan to purchase Decorator Comforters Inc.
Crown Crafts’ move into the emerging market for comforters and related products was shrewd. Demand surged beginning in the early 1980s and strengthened throughout the 1980s. Crown Crafts quickly added a full line of print and solid-color comforters with matching pillow shams, dust ruffles, and window treatments. In 1986 it became one of the first companies to combine those elements in efficient, matching sets. “We pioneered the concept of a comforter set, with the comforter, shams, and ruffle in one package, because it’s profitable to the retailer,” remarked Randolph Schmatz, vice-president of sales and marketing, in the March 13, 1989 Atlanta Business Chronicle. “Retailers don’t employ as many sales people and this eliminates the need of running around the store looking for matched sets,” he added.
Crown Crafts capitalized on market growth by asserting itself as a leader in the comforter market. For the first time, the company began selling its comforter sets in major department stores under the Crown Crafts brand name. The strategy was a success, and by 1989 Crown Crafts was known as the leading supplier of comforter products to department stores. Crown Crafts’ emphasis on comforters and accessories, particularly packaged sets, not only helped it to avert financial distress, but allowed it to sustain the rapid growth it had achieved during much of the 1970s. Sales grew at an average pace of about 30 percent during much of the 1980s, and profits rose accordingly. The company posted a $350 million deficit in 1985 but was generating steady profits by 1986 and would continue to grow both sales and net income into the mid-1990s.
Crown Crafts’ sales grew rapidly to $33.6 million in 1985 before rising nearly threefold to $91.39 million in 1989. Based primarily on the success of its comforters, the company had grown from a relatively small textile and fabrics manufacturer to a nearly $100 million retail supplier. Augmenting gains with comforters, however, were other product lines. Of import was the evolution of Crown Crafts’ jacquard-woven products, which were basically soft, cotton, blanket-like fabrics with intricately woven colors and fabric patterns. Since the late 1960s, Crown Crafts had been producing commodity-type bedspreads and blankets at its Georgia finishing plants, but it wasn’t until the late 1980s that its jacquard-woven effort came to fruition.
Recognizing the slowly increasing popularity of jacquard-woven goods, Crown Crafts had started distributing imported acrylic jacquard-woven throws in 1984. The effort was stymied, however, by consumer preference for natural fibers. So in 1987 Crown Crafts began weaving its own jacquard-woven “throws” (or light blankets) using cotton yarns in its Georgia mill. The throws were an immediate success on the market. The company boosted production and began to aggressively market the throws throughout its North American distribution channels. The company gradually added a number of new patterns, including Oriental, holiday, and floral designs, among others. In fact, Crown Crafts developed one of the most technologically advanced design centers in the world for woven fabrics.
New Directions in the 1990s
By 1990 Crown Crafts was generating sales of more than $100 million annually and netting income of about $6.7 million. It made most of that money through the sale of bedroom furnishings—comforters, bedspreads, and throws—which it sold through department stores and some national discount retailers. Beginning in the early 1990s, however, management began to take the company in a new direction. Rather than just expanding internally with add-on products and new distributors, the company began a growth program that included acquisitions and the addition of entirely new products. That initiative would be credited with more than doubling Crown Crafts’ revenue base within five years and changing the company from a textile manufacturer to a diversified home products supplier.
The effort to expand its market reach was signaled by the 1989 introduction of the Royal Santeen brand, which Crown Crafts developed in cooperation with Kita Consolidated, Ltd. of Israel. Crown Crafts used the brand to enter the high-end luxury market for bed sheets, but also comforters and accessories. Crown Crafts would eventually enter into several agreements that allowed it to market various products under brand names including Ungaro Paris and The Lang Collection. Crown Crafts’ first major acquisition came in 1991, when it purchased Goodwin Weavers. That buyout pushed Crown Crafts’ sales past $120 million in 1991 and gave the company an important toehold in the rapidly growing market for high-end cotton jacquard-woven throws.
Interestingly, Goodwin Weavers’ history dated back to 1812 and an English silkweaving enterprise. The founder’s son, James Goodwin, moved to the United States in 1837 and started weaving wool. The business was passed down for generations, along the way developing a venerable reputation as a maker of high-quality textiles. In the 1980s the company began making high-end cotton afghans, which became very popular in the late 1980s and 1990s. Crown Crafts purchased the company as a way to increase its exposure in the surging cotton throw market and to expand production capacity. The buyout was mutually beneficial, as the Goodwin family benefitted from access to Crown Crafts’ capital resources and its advanced design facility in Georgia. Moreover, the subsidiary was allowed to continue operating relatively autonomously.
We are a leading supplier of comforters and accessories and the major force in the luxury segment of this important home textile category. Since introducing the cotton throw to the American public … we have also maintained our status as the leading company in this category.
Despite activities related to its throws and other jacquard-woven goods, Crown Crafts continued to derive most of its income from its still-growing core lineup of comforters and accessories. Competition from low-cost foreign manufacturers hurt many of its American counterparts, but Crown Crafts managed to increase market share in the comforter segment and boost sales with its highly efficient manufacturing operations and savvy marketing strategy. Meanwhile, it enjoyed solid gains in the jacquard cotton throw arena. Jacquard products made up less than three percent of the total beddings market when Crown Crafts decided to target the niche. By the mid-1990s, however, jacquards were accounting for roughly 20 percent of the total market. Because Crown Crafts was among the first companies to recognize the trend, it profited from the market growth.
Spurred by sales gains in both its comforter and jacquard product lines, Crown Crafts’ revenues climbed to $151 million in 1993 and then to $187.34 million in 1994. Meanwhile, net income inched up steadily to more than $9 million annually. Gains in the comforter division were squelched in 1995, however, as market tastes again shifted, similar to the move away from crushed velvet in the early 1980s. In mid-1995, in fact, Crown Crafts reported a 63 percent drop in its first quarter profits. The decline was attributable to slow comforter sales. Fortunately, Crown Crafts was better prepared to deal with the slowdown in that core product segment because of the strength of its jacquard-woven division. Shortly before the comforter market slowdown, in fact, Crown Crafts had purchased a North Carolina company that operated 16 jacquard looms.
Crown Crafts was emphasizing the surging jacquard business going into the mid-1990s. Early in 1995, for example, the company had reached a potentially lucrative agreement with Walt Disney Co. to produce and sell jacquard-woven cotton throws featuring designs with Disney characters. Buoyed by overall gains in the jacquard segment, Crown Crafts managed to boost 1995 sales to $211 million, about $11 million of which was netted as income. Going into 1996, Crown Crafts was moving to establish itself as a diversified supplier of home accessories, including not only textiles but also various gift and decorative items. To that end, it created a new division dubbed Crown Home & Gift, which purchased two infant and juvenile goods suppliers—Red Calliope and Pillow Buddies—as well as another luxury throw supplier named Churchill Weavers.
For the mid- and late 1990s, Crown Crafts planned to evolve from a manufacturer of basic bedding materials to a supplier of fashionable, contemporary home furnishings including carpeting, collectibles, and such thematic merchandise as the Disney cotton throws. It planned, for example, to boost sales from its new Crown Home & Gift division from about $35 million in 1996 to about $100 million by the late 1990s. Meanwhile, sales of its jacquard throws—Crown Crafts was the national leader in the jacquard-woven industry—and bedroom products continued to grow, surpassing in 1995 revenues from its comforter products.
Crown Crafts Home Furnishings, Inc.; Crown Crafts Home Furnishings of Illinois, Inc.; Crown Crafts Home Furnishings of California, Inc.; KKH Corporation; The Red Calliope & Associates, Inc.; Goodwin Weavers; Churchill Weavers, Inc.
Abelson, Reed, “Crown Crafts,” Fortune, June 19, 1989, p. 148.
Chestnut, E. Randall, “Crown Crafts, Inc. Becomes Disney Licenses,” PR Newswire, June 2, 1995.
Frinton, Sandra, “Crown Open to Buy: Talking to Non-textile Accessory Firms,” HFN—The Weekly Newspaper, January 22, 1996, p. 24(2).
Harte, Susan, “Bedding Market Awakens to Take on a New Texture,” Atlanta Constitution, August 8, 1995, p. F3.
Morrison, Cindy, “Crown Crafts May Show Great Results …,” Atlanta Business Chronicle, March 13, 1989, p. A3.
Nellett, Michelle, “The Goodwins: A 75th Anniversary Feature Introducing Industry Families that Have Been Around for at Least Three Generations,” Gifts & Decorative Accessories, November 1992, p. 96(4).
Schwartz, Donna Boyle, “The Dream Team: Crown Crafts’ Bedding Goes From Sleepy to Sizzling Under Refocused Design Group,” HFD—The Weekly Home Furnishings Newspaper, March 14, 1994, p. 31(2).