Cimpress Q1 results disappoint
Thursday, November 1, 2018
Cimpress has described first-quarter sales growth as “disappointing” after revenues came in below expectations.
The web-to-print and promotional products giant posted overall group sales up 5% to $588.98m (£455.88m) in the three months to 30 September.
Sales grew by 8% on a constant currency basis. The equivalent percentage increases for the same period in 2018 were 27% and 12%.
Cimpress reported “revenue weakness across all our segments” and said that currency changes combined with the knock-on effects of acquisitions and disposals had impacted the figures.
Adjusted net operating profit was down 49% to $5.3m.
Sales at Vistaprint, the group’s biggest business unit, were up 6% to $337m, whereas expectations had been for a 9%-10% increase.
Growth at the business slowed due to a number of factors including “marketing experimentation”, the effect of increased mobile traffic on conversion rates, “the expanded roll-out of a major technology change”, and slow take up for some new product lines.
However, profits and profit margins at Vistaprint increased year-on-year.
Sales growth at the Upload & Print division, which includes Tradeprint, Exaprint, Pixartprinting and WirMachenDruck was “substantially below” the prior year, with sales increasing by 7% to $172m.
Cimpress said it had cut prices in response to “increased price-based competition” in the highly competitive trade web-to-print market, but despite this still managed to increase Upload & Print profits year-on-year, from $14.77m to $16.2m.
“We continue to believe we remain poised to outperform and outlast competitors in the long-term due to our geographic diversity, product selection, customer service, profitability and scale,” the firm stated.
Sales at National Pen, acquired at the end of 2016, were up 10% in the quarter to $66m, but profits at the business were hit by changes to accounting standards. This resulted in a $14m hit that contributed to an $18m loss for the period.
The All Other Businesses division, which includes Vistaprint Corporate Solutions and various Vistaprint overseas territories, as well as the Vida custom clothing and accessories startup acquired in August, made a loss of $9.6m (prior year loss $7.6m) on sales of $18.9m.
This division had previously included the Albumprinter business that was sold in the summer of 2017.
Cimpress also said that the US tariffs recently imposed on Chinese goods and changes to the NAFTA trade agreement would result in a “relatively small” negative impact, and it was working to mitigate the effects around this “fast-developing topic”.
In his letter to investors, Cimpress founder and chief executive Robert Keane said the group was working to resolve underlying issues and taking action to improve performance. “We focus on the long-term and we do not believe that one quarter’s financial results – whether good or bad – make or break a great company,” Keane stated.