Why Cimpress Stock Fell 19.6% in January

Man in suit watching a red arrow chart crash through the floor

What happened

Shares of Cimpress (NASDAQ: CMPR) declined 19.6% in January, according to data from S&P Global Market Intelligence , after the mass-customization company announced disappointing fiscal second-quarter results .

Even as the S&P 500 rose 8% last month, Cimpress stock plunged more than 27% on Jan. 31 alone -- the first trading day after the company's holiday-quarter results hit the wires.

So what

That's not to say Cimpress' quarter looked bad at first glance. Revenue climbed 8.3% year over year to $825.6 million, while net income arrived at $69 million, or $2.17 per share. By comparison, however, both the top and bottom lines arrived well below analysts' consensus estimates for revenue of $855 million and earnings of $2.38 per share.

Arguably most concerning, Cimpress' core Vistaprint business saw revenue rise a modest 1.3% to $434.3 million. Management blamed a combination of greater competition, discounting, and inefficient ad spending. And though Cimpress' Upload & Print and National Pen segments fared better, with revenue climbing 5.9% and 5.4%, respectively, both also arrived well below expectations.

Now what

Cimpress CEO Robert Keane admitted the quarter was "poor," and "the worst in a long time," adding that the company is working with a sense of urgency to tackle its challenges. In show of his confidence in the company, Keane also reduced his cash compensation to the legally required minimum of $455 per week, instead opting for performance share units that will be worthless unless Cimpress stock's three-year moving average achieves a compound annual growth rate of at least 11% over a rolling six- to 10-year period.

Until Cimpress shows some tangible progress toward successfully implementing its turnaround, however, I suspect the stock will remain depressed.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Cimpress. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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