Vistaprint’s Q1 sales grow 11%. Parent Cimpress expects restructuring to cut costs, streamline operations and fuel investment.

Cimpress N.V., a global online custom printer for businesses and consumers, cites a challenging revenue environment for its decision to restructure its Vistaprint custom-printing business. Vistaprint, which operates at Vistaprint.com, accounted for 61% of total fiscal 2017 revenue and for 56.7% of revenue for the first quarter ended Sept. 30.

“Vistaprint has made a difficult but appropriate decision to reorganize its business,” chief financial officer Sean Quinn told analysts on Cimpress’ Q1 earnings call last week. “You can see from Vistaprint’s quarterly results that we are taking this action because we see challenges with revenue.”

Vistaprint grew Q1 sales 11%, to $319.2 million. But in the prior fiscal year ended in June, its sales grew only 4.7% for the fourth quarter, to $319.2 million, and 7.4%, for the full year, to $1.31 billion.

Cimpress, which until a 2014 rebranding operated under the Vistaprint name, announced in early 2017 a plan to decentralize its operating structure to “improve accountability for customer satisfaction and capital returns to simplify decision-making and to improve the speed of execution,” CEO Robert Keane said at the time.

The restructuring includes building out its mass customization platform, which began in 2014. The platform combines in-house software and production technology the company uses to “mass-customize” personalized products, such as business cards, in small quantities at low prices. Cimpress says its platform features automated graphic processing steps that reduce per-order set-up costs and self-service, browser-based design tools for customers. Eventually all transactions will occur on the platform, Cimpress says.

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“The Vistaprint leadership team felt there was an opportunity to improve the way that they are operating and to streamline the organization to best deliver on their strategy and also deliver for their customers,” Quinn told analysts, according to a transcript of the call from Seeking Alpha. “Additionally, we believe these changes will assist Vistaprint in achieving the desired turns on our recent investments.”

Cimpress plans to implement the restructuring in the second quarter and expects it to result in a charge of $15 million to $17 million, Quinn said. Fiscal 2018 savings are projected to range from $20 million to $22 million.

For the first quarter of fiscal 2018 ended Sept. 30, Cimpress reported:

  • Total online sales of $563.3 million, up 27.0% from $443.7 million in the same quarter last year;
  • Vistaprint sales of $319.2 million, up 4.7% from $305.0 million, representing 56.7% of total online sales for the quarter;
  • Upload and Print unit sales of $160.4 million, up 21.5% from $132.0 million;
  • All Other Business sales of $28.1 million, up 6.8% from $26.3 million;
  • National Pen business unit sales of $59.7 million. Cimpress acquired National Pen for $202.6 million in December;
  • Operating income of $46.61 million, compared with an operating loss of $27.81 million, which the company attributes largely to the gains from the sale of Albumprinter;
  • Net income of $23.36 million, compared with a net loss of $29.103 million.

The All Other Business unit includes consumer-focused FotoKnudsen; the Most of World business units in Japan, India, Brazil and China; and the Corporate Solutions business unit, which focuses on selling through other merchants.

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In August, Cimpress closed the sale of its Netherlands-based Albumprinter photo book unit to an unnamed buyer. The consumer-focused Albumprinter unit was profitable, but had underperformed against the competition, Keane said.

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