You have wonder whether American Greetings (NYSE:AM) will be including some timely condolence cards as it issues 300 pink slips in a move to trim down its corporate payroll. Maybe something like:
Thank you for the time you spent
A job is just like wet cement
It's messy, sure, at times unfair
You leave a mark though you're not there
American Greetings doesn't seem to be hiring at the moment so it's not as if you will be seeing that lame greeting card in print anytime soon. Yet American Greetings announcing a layoff may seem odd for two reasons. The first is that we are now heading into the company's peak season. The Greeting Card Association reports that the two most popular card-sending holidays are Christmas and Valentine's Day.
The second reason that the news may come as a surprise is that American Greetings was apparently starting to do so well. Back in September the company produced a quarterly profit, reversing a loss a year earlier. It was also so upbeat about its prospects that it initiated a quarterly dividend.
Second only to Hallmark in the greeting cards space, shouldn't the company have been hiring instead of dismissing less than 2% of its 20,000 full-time employees? Well, a closer look at the top line during the company's most recent report should have clued investors in to the reality at American Greetings. Revenue growth was stagnant, practically flat at $392 million for the period.
It was operational improvements that paved the way to profitability for the company. So while the company's headline of choice to describe the layoffs reads a rather euphemistic "American Greetings Continues to Drive Efficiencies," it's actually accurate. The company has restructured its debt and shaved its overhead to deliver a healthier bottom line despite a sector that, quite frankly, is lucky to be stuck in neutral.
With the advent of free online cards available through places such as Yahoo! (NASDAQ:YHOO) and Amazon (NASDAQ:AMZN), it's commendable that print card companies are still hanging in there. The digital migration obviously wasn't kind to traditional film companies such as Kodak (NYSE:EK) in the age of digital cameras, so it's good to see an old-fashioned company not only cope with the malaise but also prosper as a result of running a tighter ship.
So please allow me the chance to roll with that cold yet spot-on press release headline to wrap up this piece with another stab at a greeting card.
American Greetings continues to drive efficiencies
Though the road is never safe when one is driving with deficiencies
Here is hoping that 300 souls land on their feet
At the very least look left and right when crossing the street
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Longtime Fool contributor Rick Munarriz hopes to send out his holiday greeting cards over the weekend. He's just hoping that it's THIS weekend. He does not own shares in any of the companies mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks a day early.
