American Greetings expects growth despite tough retail climate thanks to restructuring efforts

By Ronda Fears

Nashville, Tenn., Oct. 8 - American Greetings Corp. is reaping the benefits of a restructuring completed in 2002 and is poised for growth despite the tough retail climate, chief executive Morry Weiss said at the McDonald Investments Inc. consumer growth conference Tuesday.

"It's safe to say that everything we set out to do and everything we said we would do has been accomplished," plus additional opportunities for improvement identified, Weiss said.

"American Greetings is starting to reap the benefits" of a significant restructuring in 2001 and 2002.

Going forward, he said the greeting card company is targeting a return to EBITDA margins in the mid-to-high teens with an improvement in earnings-per-share results.

The company's goals also include maximizing cash flow and reducing debt in the short-term, hoping to improve its credit ratings. At the end of fiscal second quarter, Aug. 31, the company reported debt declined to $861.1 million from $991.5 million a year before.

Refinancing its senior bank debt in fiscal 2004 is another priority, Weiss said.

"We have ample liquidity and minimal capital expenditure requirements going forward," Weiss said.

"We have reiterated that we are very comfortable with out estimates, despite the uncertainty in retail."

For fiscal 2003, American Greetings forecasts diluted EPS of $1.45 to $1.55, a 37.6% gain from fiscal 2002, and EBITDA of $340 million to $350 million.

Improvements, Weiss said, are a direct result of the completed restructuring.

In that, the company reduced its workforce by 13%, consolidated six facilities and rationalized brands to four from six. Also, the company made some key changes to its business plan, with regard to receivables and inventory, along with other ongoing cost savings.

American Greetings has a 39% market share in the $7 billion greeting card industry, Weiss said, giving it a strong No. 2 position.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.