Cimpress NV (CMPR, Financial), owner of Vistaprint and a Dutch investment and business firm, is down over 24% from the start of the year, and it’s just the start of February. The company’s stock price has fallen from $115 a share to $77.85 in the last week.
The company’s fiscal second-quarter earnings failed to impress on a quarter that included holiday sales, which normally provide a boost to the company’s bottom line.
Earnings for the company rely heavily on revenue from the Vistaprint brand, which fell to $428.9 million from $434.3 million year-over-year. The company's total revenue totaled $825.5 million, reflecting growth of just 8%. Revenue growth has slowed from a 32% gain the previous year.
Performance remained solid across all segments, but the top line missed estimates of $859 million. Vistaprint’s segment includes email newsletter templates, digital marketing, marketing materials, banners, business cards and a variety of other products to help businesses get up and running.
The company’s Upload and Print segment saw revenues rise from $192.5 million to $203.8 million. Other business revenue also rose from $21 million to $61.8 million. A major concern for investors is that gross margins contracted from 52.7% to 50.2%.
Debt has increased significantly, rising from $700.5 million to $1.05 billion.
Revenue growth remains the underlying reason for the company’s poor stock performance this year. Management claims that revenue growth in the last quarter was also disappointing, and that the company has suffered from deteriorating performance in the last six-month period.
Management said that many of the issues are within the company’s control. Competitors have caused the price of advertising to rise, and the price to customers has fallen. Input costs are also rising, such as the cost of paper, which are hurting the company’s profit margins.
CEO Robert Keane has decided to reduce his salary to just $455 a week, the legally required minimum salary, as a sign that he has strong faith that the company will be able to reignite its growth.
Vistaprint has adjusted revenue growth forecast for the “foreseeable future” to be flat or negative. The lack of growth in Vistaprint revenue will be slightly offset by projected double-digit growth in the all other businesses categories and high-single-digit growth in the company’s Upload and Print segment.
Disclosure: The author does not have any stake in the listed equities.
