Advertising insert company Advo (AD) warned of a weak second quarter, citing soft results in its so-called zone product.
Advo, Windsor, Conn., also said it reached a joint distribution agreement with
Los Angeles Times
and closely held MediaNews Group of Denver. The company said the deal, which calls for the publication of a special ad package in Southern California, "will result in savings in the low double-digit millions annually," beginning in August with the start of the joint program.
But Advo said it expects to make around 17 cents a share for the second quarter on revenue of $355 million. Analysts were looking for 33 cents a share on $358 million, says Thomson Financial.
"Although second quarter revenues are expected to be up between 4% and 5%, we are not pleased with our performance on either revenue or profits," said CEO Scott Harding. "Both were affected primarily by softness in our high-margin zone product revenue, along with several other factors."
The company pledged to explain those factors in a postclose conference call but added, "Our zone products have strong appeal to promotion-oriented retailers. We are re-doubling our efforts to market them to a broader set of advertisers and categories, and are confident in our ability to fix this issue in the months ahead."