American Greetings (AM)
Q3 2012 Earnings Call
December 22, 2011 9:00 am ET
Zev Weiss - Chief Executive Officer, Director and Member of Executive Committee
Stephen J. Smith - Chief Financial Officer and Senior Vice President
Gregory M. Steinberg - Director of Investor Relations and Treasurer
Carla Casella - JP Morgan Chase & Co, Research Division
Jeffrey S. Stein - Northcoast Research
Previous Statements by AM
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Gregory M. Steinberg
Thank you, Jennifer. Good morning, everyone, and welcome to our third quarter conference call. Joining me today on the call are Zev Weiss, our CEO; Jeff Weiss, our COO; and Steve Smith, our CFO. We released our earnings for the third quarter fiscal 2012 this morning. If you not yet have our third quarter press release, you can find a copy within the Investors section of the American Greetings website at investors.americangreetings.com.
As you may expect, some of our comments today include statements about projections for the future. Those projections involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. We cannot guarantee the accuracy of any forecasts or estimates, and we do not plan to update any forward-looking statements. If you'd like more information on our risks involving forward-looking statements, please see our annual report or our SEC filings. Previous earnings releases as well as our 10-Qs, 10-Ks and annual report are available on the Investors section of the American Greetings website.
We will now proceed with comments from both our CEO and CFO, followed by a question-and-answer session. Zev?
Thank you, Greg, and good morning, everyone. This morning, I will share a few comments on how our ongoing product leadership initiative is supporting our revenue growth, then discuss our capital allocation, systems refresh project, new headquarter building and outlook for the balance of fiscal year 2012. Finally, I'll turn it over to Steve to walk through our financials for the quarter.
I'm really delighted with our revenue growth this quarter in both our domestic and international businesses. We believe that our commitment to our product leadership strategy continues to be very successful. Our investments are paying off, and we feel very good about our overall momentum in the marketplace. As a result of our product focus and in-store execution, our recently expanded retail relationships are going well and progressing as planned, helping us to deliver incremental sales through the addition of new space at retail in both legacy and new doors.
Also helping drive revenue growth is our leading portfolio of products. The acquisitions of Recycled Paper Greetings, Papyrus and most recently, Watermark allow us to provide uniquely tailored solutions to different channels and different retailers within each channel, thereby bringing a full range of products, from humorous to upscale, to our consumers. We have and will continue to leverage both the unique creative models and unique go-to-market strategies each of these groups creates. This portfolio of brands, together with our complementary strength of manufacturing and distribution, we believe will enable further growth.
As part of our product leadership initiative, we continue to bring innovation into our core greeting card brands through a variety of formats, including paper engineering, interactive technology and the use of music, movement, sound and lights. In the past, I provided many examples of these great products, from cards with motion to cards with LCD screens. These innovative formats are fresh twists on greeting cards that drive interest and excitement in the category and support our retailer strategies.
We also continue to evolve our core card lines in other ways. Supported by research, we focus our creative resources on developing even more exceptional art work, color palettes and editorial sentiments. This focus has allowed us to develop exceptional new greeting card lines such as justWink. The justWink line was designed to help our younger consumers connect with each other in innovative ways including through a smartphone app that extends their greeting card experience into the digital world. Efforts like the innovative formats, better editorial sentiments and smartphone apps help deliver the retail productivity we desire for our retail partners.
On the digital side, we continue to be a leader by offering products through our traditional eCard websites such as jacquielawson.com and AmericanGreetings.com and through more recently developed sites like cardstore.com. Cardstore.com allows consumers to purchase paper greeting cards on the Internet and then have the physical cards delivered directly to recipient. Consumers can choose from thousands of card designs and have their cards personalized and shipped directly to the recipient. We are very excited about consumer reaction to the site, our findings regarding the mix of products they chose from the products offered and the consumer reaction to our initial marketing and promotional efforts.
With the strength of our creative studios and our leading brand portfolio, we believe that we are well positioned to meet the needs of consumers in any channel in which they shop, including the Internet and the various mobile platforms.
As we have discussed in the past, our goal is to continue to expand our position as an industry leader. We have and expect to continue to focus our resources on growing our core greeting card business by developing new products and enabling new channels of physical and electronic distribution in order to make American Greetings the natural and preferred social expression solution. Toward the goal of expanding distribution and revenue, in connection with these efforts, we are likely to incur the incremental costs associated with expanded distribution, including upfront costs prior to any incremental revenue being generated.