BAMKO Sales Up 67%, 4imprint Recovering and Other Promo Industry Earnings Reports News
Last week, a number of prominent promo industry companies released earnings reports. While some of those companies are faring better than others as they navigate the pandemic, the news overall was encouraging. Here's how a few of these promo businesses performed.
BAMKO has excelled during the pandemic, announcing in July that its Q2 revenue was up 218 percent year over year while many other promo companies were still reeling. At the time, Michael Benstock, CEO of Superior Uniform Group, BAMKO's parent company, said he expected record sales for 2020. In an earnings call last week announcing the company's third-quarter results, Benstock indicated that Superior Uniform Group and BAMKO, in particular, remained on track.
"I’m pleased to report that we had another remarkable quarter at BAMKO, with sales up 67 percent to $44.2 million dollars in the third quarter compared to the prior year period," he said. "Those results were driven by a mix of traditional branded merchandise as well as continued demand for PPE. BAMKO’s third quarter operating margins were 15.7 percent, yet another testament to BAMKO’s ability to optimize its operating margins through scale. We are seeing PPE product orders starting to slow somewhat, while traditional promotional products are gradually returning."
Benstock said BAMKO had a 60 percent backlog of traditional promotional products orders, up from a 40 percent backlog at the end of the second quarter, further indicating that non-PPE promo orders are recovering for the distributor. BAMKO has also managed to convert around 30 percent of new PPE customers into traditional promotional products customers.
"[T]he preponderance of BAMKO’s corporate PPE programs are being structured as larger, longer-term opportunities to meet sustained PPE needs alongside traditional branded merchandise," Benstock said.
While 4imprint ranked No. 1 on our 2020 Top Distributors List with $839.2 million in 2019 promotional products sales, the company has been hit especially hard during the pandemic. In April, it reported that order volume was down 80 percent, and in August it reported that its sales were down 34 percent.
Its latest earnings report, though, shows signs of recovery. According to investment firm Morningstar, 4imprint said its weekly order intake, while still down, is now at 60 percent of prior year levels, up from the 50 percent it reported in August and significantly higher than the 20 percent it reported early in the pandemic. For its last earnings period, the company's order values are actually running higher than historical levels, helping its average weekly revenue reach 65 percent of prior-year levels.
Most encouraging is 4imprint's apparel business. The company said decorated apparel volume at its distribution center in Oshkosh, Wisconsin, has returned at close to prior-year levels, allowing it to return permanent labor capacity at the facility to 100 percent.
Cimpress, parent company of Vistaprint and National Pen, reported that overall company sales were down 7.5 percent year over year for its fiscal 2021 first quarter, which corresponds with the third quarter of calendar year 2020. Vistaprint sales declined 4 percent, while National Pen sales dropped 3.6 percent. Relative to the sales decreases we've seen elsewhere in the promo industry, these numbers are solid and represent significant improvements for the company. (In the previous quarter, Vistaprint's sales were down 32 percent.) The numbers indicate seemingly stable footing for Cimpress moving forward.
"While we are still impacted by the pandemic, it's necessary and helpful to keep perspective on our progress, which is evident by comparing our most recent financials against the same quarter two years ago," said Robert Keane, chairman and CEO of Cimpress, in a letter to shareholders. "Revenue was roughly flat compared to the same period in FY2019. This is far below our aspiration for growth, but is the result of two major factors that we have discussed extensively: the planned pullback of unprofitable advertising at Vistaprint and the unforeseen revenue impact from the pandemic. On the other hand ... compared to two years ago we have dramatically improved our operating income, cash flow from operations, and adjusted free cash flow, and more than doubled adjusted EBITDA. These bottom-line results are a direct result of execution of our strategy and of the realization of returns on past investments."
Keane also pointed to Vistaprint's October acquisition of design agency 99designs as a positive indicator of Cimpress' overall financial health.
"Looking to the future beyond the pandemic, in Q1 we stayed focused on execution while also maintaining our growth investments in technology, data and analytics, new product introductions and customer experience improvements," he said. "Importantly, we recently acquired 99designs because customer research and our existing design services both indicate that small businesses who purchase graphic design spend more on the products that Vistaprint wants to sell. 99designs should enable Vistaprint to serve customer design needs at scale, increase our addressable market, and help attract and retain higher lifetime value customers."
Apparel wholesaler Gildan reported that net sales for the first nine months of 2020 were down 40 percent year over year, with activewear sales down 46 percent. The company said a chunk of that drop in activewear sales was the result of distributor inventory destocking and its own discounted pricing action in promotional imprintables.
Gildan's net sales for the third quarter were down 18.6 percent year over year, but those results were a significant improvement over the second quarter. The company said its Q3 sales were $603 million, up from $230 million in Q2. It also said that its imprintables sales were down 21 percent in U.S. markets and 25 percent internationally, but that point of sales levels in this channel remained stable.
“We were pleased with the recovery of our sales and earnings during the third quarter," Glenn J. Chamandy, president and CEO of Gildan, said in a press release. "... [W]hile the lack of large events continues to impact imprintable channels, we are nonetheless seeing areas of opportunity. Further, we continue to be pleased with the results we are seeing from our 'Back to Basics' strategy as we continue to place a strong focus on meeting our customers' needs and growing market share through simplification of our product portfolios, removal of cost and complexity from our business and fully leveraging our world class, sustainably-focused, vertically-integrated manufacturing platform.”