American Greetings Corp. Reports Operating Results (10-Q)
American Greetings Corp. has a market cap of $924.5 million; its shares were traded at around $23.07 with a P/E ratio of 9.3 and P/S ratio of 0.6. The dividend yield of American Greetings Corp. stocks is 2.4%. American Greetings Corp. had an annual average earning growth of 8.3% over the past 5 years.AM is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:For the three months ended November 26, 2010, consolidated net sales were $422.0 million, down from $431.5 million in the prior year third quarter. This 2.2%, or approximately $10 million, decrease was primarily the result of lower sales in our North American Social Expression Products segment of approximately $17 million. This decrease was partially offset by increases in our International Social Expression Products segment of approximately $4 million and in our fixtures business, included in non-reportable segments, of approximately $2 million.
For the nine months ended November 26, 2010, consolidated net sales were $1.15 billion, down from $1.19 billion in the prior year nine months. This 3.5%, or approximately $42 million, decline was primarily the result of decreased net sales in our North American Social Expression Products segment and our Retail Operations segment of approximately $50 million and $12 million, respectively. These decreases were partially offset by higher net sales in our fixtures business and in our International Social Expression Products segment of approximately $7 million and $6 million, respectively. Foreign currency translation also favorably impacted net sales by approximately $7 million.
MLOPC for the nine months ended November 26, 2010 were $502.9 million, a decrease of approximately $23 million from $525.4 million for the comparable period in the prior year. As a percentage of total revenue, these costs were 43.0% in the current period compared to 43.4% for the nine months ended November 27, 2009. Approximately $5 million and $8 million of the decrease was due to the elimination of operating costs as a result of the divestiture of the retail store operations and the wind down of our Mexican operations in the prior year, respectively. The remaining approximately $10 million decrease was due to favorable volume variances as a result of a combination of the party goods transaction in the prior year fourth quarter and lower net sales of our gift packaging products. In addition, lower inventory scrap expense in the quarter was offset by higher product content costs.
SDM expenses for the nine months ended November 26, 2010 were $347.2 million, decreasing from $373.9 million for the comparable period in the prior year. The decrease of almost $27 million is due to lower spending of approximately $29 million and unfavorable foreign currency translation of approximately $2 million. The elimination of operating costs due to the disposition of our retail stores and the wind down of our Mexican operations, which both occurred in the prior year, accounted for approximately $12 million and $4 million, respectively, of the decrease in the current year nine months. Lower supply chain costs, specifically field sales and service operations costs of approximately $13 million, and freight and distribution costs of approximately $4 million were the result of PRG integration savings and a reduction in units shipped during the current year nine months. These reductions were partially offset by higher marketing and product management costs of approximately $4 million.
compensation expense of approximately $6 million. In addition, the prior year included a benefit of approximately $8 million related to corporate owned life insurance, which did not recur in the current year nine months. These increases were partially offset by reduced variable compensation expenses of approximately $10 million, the elimination of costs associated with our retail store operations of approximately $2 million, and lower expenses related to our post retirement benefit plan of approximately $3 million.
Total revenue of our North American Social Expression Products segment, excluding the impact of foreign exchange and intersegment items, decreased $17.1 million and $49.8 million for the three and nine months ended November 26, 2010, respectively, compared to the prior year periods. The main driver of this decline in both periods was the lower sales of party goods, which decreased approximately $9 million and $26 million for the current year three and nine months, respectively, primarily due to the transaction completed in the prior year fourth quarter. Also contributing to the decline was a decrease in gift packaging and other non-card products during the three and nine month periods of approximately $10 million and $20 million, respectively. Our seasonal card sales improved by over $2 million during the current year three months while everyday card sales declined almost $5 million during the nine months ended November 26, 2010.
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