American Greetings Gets the Cold Shoulder

Today, American Greetings

announced that the company's third quarter earnings fell almost 40%, as sales and marketing costs rose. The company cut its forecast for 2012 is it expected that those costs would affect its bottom line. Q3 EPS came in at $0.50 vs $0.81 analyst estimate. The company further irritated investors as it refused to answer many analyst questions on its conference call, instead opting to issue many "no comment" responses. The earnings and guidance numbers show mixed results compared to Q3 2010. The EPS figure of $0.50 is a sharp falloff from last year's $0.78 figure, while revenue increased to $463.6M from $430.1M last year. However, the most startling revelation was the company's lower forecast for 2012, in which it expected to generate $90 million to $110 million cash flow from operating activities, a much lower figure than its previous estimate of $125 million to $145 million. Lastly, the company announced that it had bought back 2 million shares during the quarter at a cost of about $34.5 million. News of American Greetings's poor earnings report originally broke via Benzinga Pro. Check it out

. American Greetings has been under fire over the last quarter, beginning when Apple

announced that its own greeting card application for the iPhone. The sheer simplicity of the idea, being able to create a greeting card from your phone and have it mailed to the recipient without leaving home, made investors in American Greeting nervous about its business prospects. Consumers are also looking to cut unnecessary expenses, potentially making $3 and $4 greeting cards obsolete. A recent study by Roy Morgan Research indicated that most greeting card buyers believe that the American economy is improving and feel financially stable. Buyers are also predominantly women, from the Midwest and have traditional values. Instead of making the same cards that consumers have seen for decades, American Greetings could utilize specific consumer data to improve card content and product offerings. The company's earnings call featured a number of analysts who wanted to know about the company's shrinking margin performance. Operating margin fell to 7.2% from a 13% figure in the previous quarter, and the company refused to elaborate on the decline in performance. The company attempted to put a more positive spin on the earnings report. "I am delighted with our revenue growth this quarter in both our domestic and international businesses," said CEO Zev Weiss. "With our strong revenue growth this quarter, we feel more confident regarding our ability to hit or surpass the full year revenue growth target of 3%." American Greetings is a company who targets consumers who may not exist anymore. Digital greeting cards and a lack of disposable income have hurt many consumers, and it remains to be seen whether they will return.