Cimpress suffered a “turbulent and challenging 2019” financial year, yet nonetheless managed to increase sales by 6%.
Its full year revenue came in at $2.75 billion ($2.59 billion) which was below expectations and below what CEO Robert Keane believes is acceptable. In the annual letter to the company’s shareholders he takes the blame for mistakes during the company’s period of “corporate adolescence in which we learned hard lessons”.
These include the costly centralisation of decision making as Cimpress has growth through acquisition. This has been reversed he says, with on the ground teams more able to take entrepreneurial decisions that attracted Cimpress in the first place.
The actions taken earlier in the year started to have an impact on the fourth quarter. High among these was the decision to reduce advertising for Vistaprint. Spend was reduced 31.9%, some $24.5 million. It has also shifted to using third-party applications where appropriate while continuing to work with the Mass Customisation Platform. “We have over invested in advertising,” says Keane.
Financial regulations have forced the company to split its Upload and Print businesses. The German speaking operations now trade as Print Brothers while non German business, Exaprint, Tradeprint, Easyprint and Pixart come under the heading of The Print Group. However, it continues to combine revenues for ease of comparison. In the year ending in June, the upload and print division reported sales of $768.9 million, with the previous year at $730 million. The growth was below that recorded the previous year, but despite increased competition “revenue will grow at an attractive rate for the foreseeable future” the CEO says.
The company also believes that its size will allow it to “outperform and outlast competitors in the long term due to our geographic diversity, product selection, customer service, profitability and scale”. The landscape has changed. “E-commerce standards have risen significantly, as have our customers expectations,” Keane notes.
The biggest disappointment and reversal came in Brazil where Cimpress owns the largest online brand, Printi. It is one acquisition that Keane says Cimpress should not have made. “We have destroyed shareholder value with this investment,” he says.
It has not prevented acquisitions. During the year the companywide its biggest deal to date paying $271 million for BuildaSign. This had a positive impact on the results, helping Cimpress increase sales over 2018’s level. Future acquisitions of start up businesses will have a more narrow focus “to reduce investment levels and increase the probability of strong future returns”.
By Gareth Ward
Cimpress has suffered a turbulent year says CEO Robert Keane, but this will not deflect it from its course and its size will see off smaller competitors while the demands on online print are increasing.