Advo Continues Revenue Growth Streak at Slower Pace

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By: E&P Staff

Advo reported on Thursday that revenues for its first fiscal quarter ending Dec. 24, 2005, grew 2.3% to $358.2 million compared to the same period a year ago.

Diluted earnings per share for the quarter increased 46.2% to $0.38. The company’s first quarter fiscal EPS did not include incremental expenses of $.03 for the expensing of stock options.

Shared advertising packages distributed slipped 0.5%, primarily due to households in the Gulf Coast where mail was undeliverable in the wake of last year’s hurricanes. Pieces per package increased 5.6% — the largest quarter-over-quarter improvement the company has realized in six quarters. Shared advertising piece volumes rose 5.1%. Revenue per piece dropped 2.4%, driven by lower insert weights and lower revenues in Advo’s ShopWise wrap product.

Operating margins as a percent of revenue grew 1.7 percentage points over the prior year to 5.8%.

“A key goal in fiscal 2006 is to improve our profit margins,” Scott Harding, Advo’s CEO, said in a statement. “In the first quarter, we did just that, demonstrating the operating leverage that is inherent in our business when we fill our packages and control costs.

“In the first quarter we achieved our 14th consecutive quarter of revenue growth on top of 16% growth in the year ago quarter. Although we were disappointed in our quarterly revenue growth of 2.3%, we continue to be confident in our long-term opportunity to drive sustained profitable growth across our business.”

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