Gifts and greeting cards maker American Greetings Corp. (AM) reported Wednesday a decline in first-quarter profit, reflecting lower revenues as well as a loss on sale of its retail store operations. The Cleveland, Ohio-based company's net income for the quarter declined to $9.96 million or $0.25 per share from $13.33 million or $0.27 per share in the previous year. During the first quarter, the company sold its retail store operations to Schurman Fine Papers, which operates card and gift retail stores under the name Papyrus, resulting in a preliminary non-cash loss of $28.3 million or after-tax loss of about $17.4 million that reduced earnings per share by nearly $0.44.
Total revenues for the quarter decreased to $412.92 million from $428.3 million in the prior year. Net sales were $409.28 million, down from $425.46 million a year earlier.
Segment-wise, net revenues from North American Social Expression Products increased to $319.08 million from $288.29 million in the previous year. International Social Expression Products net revenues declined to $52.76 million from $70.96 million a year ago. Retail operations generated net revenues of $11.84 million, compared to $41.98 million last year, while AG Interactive posted revenues of $18.84 million, down from $20.56 million in the prior year. Non-reportable segments net revenues increased to $10.4 million from $6.51 million in the year-ago period.
During the period, American Greetings said it also purchased the wholesale division of Schurman, which supplies Papyrus brand greeting cards mainly to leading specialty, mass, grocery and drug store channels and purchased a 15% equity interest in Schurman.
Zev Weiss, chief executive officer said, "We also realized improved margins as a result of our cost reduction activities last year and we will continue to focus on efficiencies this year." Looking ahead, the company said it currently anticipates cash flow from operating activities less capital expenditures to be greater than $70 million this fiscal year. AM closed Tuesday's regular trading at $6.36 on the NYSE.
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