Cafe Press CEO Fred Durham cited improving gross margin and customer service scores as positives.

Customized gift e-retailer Cafe Press Inc. weathered a tough quarter as sales fell and net loss widened. Despite plummeting sales, CEO Fred Durham noted gross margin was a bright spot.

“The first quarter marks the fourth consecutive quarter of year-over-year improvements to our gross margin, contribution margin and customer service scores, despite a lower revenue base,” Durham said. “Our consistent execution, coupled with the extension of our stock repurchase program, is evidence of our commitment to deliver on the strategic initiatives that are aligned with our operating philosophy and to unlock shareholder value.”

Cafe Press, No. 249 in the Internet Retailer 2016 Top 500 Guide, reported gross margin was 41.1% of net revenue, compared with 36.9% in the first quarter of 2015. As of March 31, the company had repurchased approximately 980,000 shares of common stock totaling $4.4 million.

The online-only retailer reorganized with the early 2015 sale of what it called non-core business units. It sold CanvasOnDemand.com, GreatBigCanvas.com and ImageKind.com, collectively known as the e-retailer’s Arts business, to Circle Graphics Inc., a Colorado-based printing company, for $31.5 million in cash. In late February Cafe Press announced the sale of its Groups business, composed of Logosportswear.com, TeamSportswear.com and Tfund.com, to investment firm Digital Fuel Capital LLC for approximately $10.3 million in cash. At the time Cafe Press said the Arts and Groups business combined generated about 35%, or $80.3 million, of 2014 sales, which were $229.5 million.

In August the e-retailer sold EZ Prints, which it bought for $30 million in 2012. The buyer was not disclosed. EZ Prints was part of CafePress’ Services division, which accounted for about 20% of revenue.

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For the first quarter ended March 31, Cafe Press reported:

  • E-commerce sales of $18.1 million, down 23.3% from $23.6 million in the first quarter of 2015.
  • Customer orders declined by 13.3% to 535,170 from 616,938.
  • Average order value dropped $2 (5.6%) to $34 from $36.
  • Net loss of $2.98 million, compared with net income of $12.18 million in the same period last year.
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