American Greetings Q1 Earnings Fall (AM)
American Greetings Corp. (NYSE: AM) reported sharp fall in first-quarter earnings. The Company said that bottom line was hurt mainly by costs associated to the bankruptcy of its British distributor Clinton Cards PLC.
Clinton Cards, which comprises of 767 stores under the Birthdays and Clinton Card brands, was placed under the control of administrators last month because it could not settle up a 35 million pounds loan to its biggest supplier American Greetings.
Earlier this month, American Greetings bought 397 stores of Clinton Cards thereby providing some time to bankrupt retailer to liquidate its remaining assets and pay off creditors.
American Greetings said that cost linked to bad debt write offs at Clinton Cards hurt earnings by 35 cents per share in the first quarter.
The company’s earnings dropped to $7.25 million or 20 cents a share, from $32.5 million, or 78 cents a share, in previous year.
Sales also contracted 2.2 percent to $393.1 million, hurt by an impairment charge associated to a supply agreement with Clinton Cards’ Birthdays unit.
Commenting over results, American Greetings CEO, Zev Weiss said “I am pleased with the overall performance of our core business in the first fiscal quarter, holding aside the impact of Clinton Cards. Our pipeline of product, breadth of brands and innovation continue to position us as the card company that sells more cards in more places than any other company in the world.”
American Greetings Corporation’s main greeting card lines are American Greetings, Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, including other paper product offerings such as DesignWare party goods and Plus Mark gift-packaging and boxed card.
AM shares ended the day 0.81% lower at $14.62. Year-to-date, the stock gained 16.87%, outperforming the S&P 500.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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