Valassis Reports Revenue Decline on FSI Softness

By: E&P Staff

Valassis reported on Thursday that total revenue for Q2 declined 5.7% to $260.6 million compared to the same period a year ago. Net earnings for the quarter were $19.7 million or $.41 in earnings per share.

By company segment, freestanding insert (FSI) revenue dropped 12.9% to $117 million. Run of Press revenue grew 26% to $34.4 million. Neighborhood Targeted Products revenue slipped 6.6% to $67.4 million. Household Targeted Products revenue decreased 15% to $14.2 million. International & Services revenue increased 7% to $27.6 million.

In a note released today, Prudential Equity Research points out that Valassis is getting hit in the FSI category in part because a major grocery store chain that ran roughly 30 national equivalent pages of custom co-ops did not do so this year. And the slowing of the low-carb diet craze has halted new product releases.

Valassis management said they are going to increase ROI for customers by testing new formats and distribution methods, according to the note.

Earnings at Valassis beat Prudential?s forecast by a penny, thought the research firm is still leery about the recent plans to acquire direct mail company ADVO. ?The integration risk is our biggest concern,? analysts wrote.

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