American Greetings Corp. (AM), a maker of social expression products, on Thursday reported a 37 percent decline in profit for the third quarter, as increased revenues from North America and international regions were offset by higher costs and expenses. Following the results, the company's shares are down 10 percent in pre-market trading.
The Cleveland, Ohio-based company's net income for the third quarter was $20.25 million or $0.50 per share, lower than $32.16 million or $0.78 per share in the year-ago period.
Pre-tax income declined to $29.7 million from $51.5 million in the previous year, reflecting lower earnings at the North American, International and AG Interactive segments.
Total revenue for the quarter increased 7.8 percent to $463.62 million from $430.14 million in the prior-year period. Net sales grew to $457.14 million from $421.99 million in the same period last year, while other revenues declined.
Revenues from North American social expression products grew 4.5 percent to $331.91 million, while international revenues increased 29 percent to $103.35 million.
However, revenues from AG Interactive, the company's electronic greetings and other digital content unit, declined 12 percent, while revenues from non-reportable segments decreased 14 percent.
Zev Weiss, chief executive officer of American Greetings, said, "With our strong revenue growth this quarter, we feel more confident regarding our ability to hit or surpass the full year revenue growth target of three percent."
During the quarter, American Greetings purchased about 2 million shares under an existing share repurchase program. The company noted that the share repurchase was a continuation of a multi-year effort where it has reduced its share count by about 50 percent over the past seven years.
Looking ahead to fiscal year 2012, American Greetings now expects to attain or surpass revenue growth of 3 percent from the prior year. Previously, the company projected revenue for the year to grow about 3 percent. However, American Greetings lowered its forecast for full-year cash flow from operating activities, less capital expenditures, citing additional expenses and investments to support its product leadership strategy, expanded customer relationships and an information systems refresh project.
The company now forecasts cash flow from operating activities minus capital expenditures in a range of $35 million to $50 million, down from the prior range of $80 million to $100 million.
AM closed Wednesday's trading at $17.13, up $0.90 on a volume of 453,400 shares. In pre-market activity, the stock is currently trading at $15.27, down $1.71 or 10.07 percent.
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