Yahoo Finance Strength in Vista Segment Aids Cimpress (CMPR) Amid Cost Woes
Cimpress plc CMPR is gaining strength across the Vista, National Pen and Upload & Print segments. Its Vista segment is being aided by robust demand for signage and promotional products, apparel and gifts. Also, an increase in the customer count and continued increase of revenue per customer bode well for the segment. In the first nine months of fiscal 2024, revenues in the segment grew 8% year over year.
Significant growth in the e-commerce and telesales channels is driving the National Pen segment. The segment’s revenues grew 8% year over year in the first nine months of fiscal 2024. In the same period, the Upload & Print segment’s revenues rose 8.5% year over year, supported by increasing order rates. Driven by business strength, Cimpress expects total sales to increase at least 7%.
Cimpress’ effective cost-control measures are supporting its margin performance. The gross margin was up 100 basis points, year over year, in the third quarter of fiscal 2024. Also, adjusted EBITDA margin grew 300 basis points, year over year, due to reduced operating expenses.
The scale of Cimpress’ operation gives small business customers access to quality products and printing services, which would otherwise have been out of reach. The product line expanded to include a wide variety of offerings for customers' marketing needs. Also, the PrintBrothers' businesses continue to adopt technologies that are part of the company’s mass customization platform.
Cimpress is also restructuring its business by narrowing the product development teams and combining the same that were working on similar activities earlier. This action is likely to improve customer value and the efficiency of the business over the long term.
However, Cimpress is persistently bearing the brunt of input cost inflation. In the fiscal third quarter, the cost of revenues increased 2.5% on a year-over-year basis due to rising production and shipping costs. General and administrative expenses rose 3.2% year over year in the same period due to higher travel and training costs and consulting spending. Escalation in costs, if not controlled, can severely affect margins and profitability in the quarters ahead.
Cimpress intends to expand its business in new overseas markets. Its international presence exposes it to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry.
In the past year, this Zacks Rank #3 (Hold) company has surged 66.3% compared with the industry’s 28.9% growth.
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