Creative Homeowner Hammered
by Jim Milliot -- Publishers Weekly, 7/21/2008 7:48:00 AM
The slump in virtually all areas of the housing market resulted in a steep drop in results at Creative Homeowner, with sales in the third quarter ended June 30 plunging 45%, to $3.7 million, and the company posting a loss of $3 million, parent company Courier Corp. reported. For the first nine months of the year, sales at Creative Homeowner were down 25%, to $15.7 million, and the company had a loss of $5.2 million.
While Courier had been expecting soft sales at Creative, Courier executives said they were surprised by the dramatic downturn in the quarter and with “no recovery in sight,” Courier took several steps to stem the bleeding. Payroll was cut by $1 million in the quarter and Creative is refocusing its business on its core operations, a move expected to save another $1 million. The transition from using a commissioned rep group to an in-house sales force that will sell Creative titles along with Courier’s other publishing divisions, Dover and REA. was also completed in the period, and the three companies continued to combined backoffice operations. And with the disappointing results, Courier said it was taking a $23.9 million impairment charge related to the losses at Creative.
The one-time charge resulted in a $12.4 million loss in the quarter for Courier compared to profits of $6.7 million in last year’s third quarter. Revenue was flat at $73.4 million. Total publishing sales in the quarter were down 25%, to $13.4 million, while revenue in the manufacturing side rose 8%, to $63.2 million. In the printing business, sales were up in the religious and trade segments, but off in education.
Courier said it expects Creative to lose another $1 million to $1.7 million in the fourth quarter, although earnings at Dover and REA are projected to improve. “We believe we are taking appropriate measures to correct an untenable situation at Creative Homeowner, but the market it serves and the overall economy continue to pose serious challenges,” CEO James Conway said.
