Shares of large news publisher Gannett (GCI -2.49%) traded nearly 26% lower as of 9:31 a.m. ET today after the company reported disappointing results for the second quarter of the year.
Gannett reported a loss of $0.39 per diluted share on total revenue of nearly $748.7 million, with both numbers widely missing analyst estimates.
In a statement accompanying the report, CEO Michael Reed said, "Our second quarter results and updated full year outlook reflect industrywide headwinds in digital advertising as well as rising costs and pressures on consumers which are impacting our near-term performance."
Reed added, "During the quarter, we experienced a rapidly tightening macroeconomic environment caused by rising inflation, coupled with distribution labor shortages and price-sensitive consumers, which has affected our traditional print business."
Along with the disappointing results, Gannett lowered its full-year guidance and now expects to report a full-year loss of $60 million to $70 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $270 million to $300 million. Last quarter, the guidance had called for $380 million to $400 million of adjusted EBITDA and for the company to make a profit of $50 million to $70 million.
As a result of the poor performance, Reed said the company is implementing significant cost-cutting focused primarily on its legacy print business. Reed also said the company has found additional nonstrategic and real estate assets to sell.
This was obviously a terrible quarter for Gannett, but entertainment and ad-supported businesses can be some of the first to get hit in a deteriorating economy.
I still believe there is a turnaround story in play at Gannett. The company continues to make progress on digital initiatives, including growing digital subscribers to 1.87 million at the end of the second quarter, which is up 35% year over year. And the company saw its best quarter ever from its digital marketing solutions business.
Lastly, the company continues to work on paying down its large $1.34 billion outstanding debt and remains focused on repaying $150 million to $200 million of debt this year. Ultimately, it could be a bumpy ride this year, but I'm not ready to give up on the stock yet.