topped analysts' lowered earnings estimates for the fiscal fourth quarter, but the company disclosed plans to eliminate about 13% of its workforce as part of a restructuring initiative that will begin immediately.
The maker of greeting cards earned $48.4 million, or 76 cents a share, before charges, for the fourth quarter. Four analysts polled by
Thomson Financial/First Call
were expecting the company to earn 75 cents in the period. The company earned $56.4 million, or 87 cents a share, in the year-ago period.
The company said earnings for the full year totaled $83.5 million, or $1.31, slightly ahead of the $1.29 Wall Street was predicting. The company had previously drastically lowered its projections for the year. In November, the company lowered its earnings forecast to between $1.30 and $1.35, from a range of $2.05 to $2.10. At one point, American Greetings was projecting earnings of $2.65 to $2.75 for the year. Revenue for the year rose to $663.2 million, up from $615.3 million in the same period last year.
Shares of American Greetings, which is based in Cleveland, fell $1.86, or 13%, to $12.48 in recent
New York Stock Exchange
"We are pleased to have met our revised projections for the year, but we are also aware that Wall Street had greater expectations of us," the company said in a statement. "The marketplace realities we encountered this year, including such factors as consumer price resistance, continued retail inventory pressure, general retail sales weakness and impact from the Internet, contributed to our earnings revision and underscore the need for our impending restructuring."
The company said that its net income for fiscal 2002 should be between $1.10 and $1.20 a share, before charges. The company is undertaking a number of initiatives that will each lead to charges in 2002, which are expected to total $300 million to $330 million. American Greetings said the new business structure will save the company about $90 million beginning in fiscal 2003.
The restructuring plan will include a product line size reduction program, the consolidation of six facilities and the elimination of about 1,500 jobs, or 13% of the company's full-time workforce. American Greetings expects to complete the program by the end of fiscal 2002.