Vistaprint CEO to Step Down After 'Disappointing' Second Quarter for Cimpress

Cimpress, Venlo, Netherlands, parent company of Vistaprint, released its second-quarter earnings report yesterday, and it's a doozy. The company said it will part with CEO Trynka Shineman after Vistaprint posted revenue growth of just 1 percent, while overall Cimpress revenue grew 8 percent, down from 32 percent in the second quarter of 2018. Robert Keane, Cimpress CEO, will serve as interim CEO for Vistaprint while the company looks for a replacement.

"I am proud of the progress Vistaprint has made over the past several years to passionately serve small-business owners with an increasingly broad and deep product assortment and materially improved customer service levels and net promoter scores," Keane said in the earnings report. "However, some of Vistaprint’s key foundational basics either have not progressed rapidly enough or have deteriorated while Vistaprint focused on evolving its customer value proposition. We can only grow as tall and fast as our foundation will support so, effective immediately, we are focusing resources to address the following inter-related issues at Vistaprint."

Keane said those issues were poor customer experience that "lacks personalization and segmentation," a poor mobile experience, insufficient analytics (for marketing, merchandising and pricing) and outdated "decision-making processes and tools" that led to "decisions that are inconsistent with the creation of intrinsic value." Keane said Cimpress will address those areas by focusing more on engineering, analytics and operations. He also said the decision to move on from Shineman was not directly related to the company's second-quarter performance.

"Vistaprint CEO Trynka Shineman and I have discussed the future of Vistaprint as well as her career goals and have decided that this is the right time for her to transition out of Cimpress," said Keane. "She and I have discussed this possibility for some time; it is not a result of our Q2 FY2019 results. I sincerely thank Trynka for the lasting imprint she has made over the past 15 years and for leading Vistaprint to significantly better levels of customer satisfaction and a greatly increased product range. I will be taking on the additional role of interim Vistaprint CEO for the foreseeable future until a permanent successor is named."

The news comes as a surprise, though maybe a mild one. In August 2018, Cimpress reported solid if unspectacular financials, with Vistaprint performing as expected, and overall annual growth at $1.4 billion compared to $1.3 billion the prior year. It also was optimistic about National Pen Co., acquired in 2016, for which it anticipated low double-digit revenue growth "for the foreseeable future." But overall revenue was down $1 million from the previous quarter, and growth was slower than expected overall.

Clearly, things got worse for Cimpress, and especially Vistaprint, as 2018 wore on.

"We are disappointed with Vistaprint's Q2 FY2019 revenue growth and profitability," Cimpress said in this quarter's report. "The majority of this weakness was driven by a decline of about 2 percent in Vistaprint's constant-currency consumer product bookings versus the prior year, in a quarter when consumer products typically generate significant revenue and profitability during the holiday season. We also saw a continued decline in new customer bookings. These weaknesses were offset by growth in marketing materials, signage and promotional products."

Cimpress cited a "combination of factors" behind Vistaprint's weaker performance, including greater competition and discounting on holiday products, higher costs for paid search keywords due to increased competition, lower conversion rates as mobile sessions have gone up, and "deployment of fewer resources to consumer products over recent years" as the company focused more on small-business owners. But the company also reported "disappointing" revenue in two other segments. Its Upload and Print division underperformed due to "increased competition in the form of product pricing and advertising," while its National Pen Co. segment saw increased year-over-year profit but underlying decline after new customer acquisition initiatives failed to generate the expected return on investment.

While Keane opened his letter to investors by calling the poor quarter the "worst in a long time," he said that Cimpress "remains financially strong" and expressed optimism, saying that most of the company's performance issues were within its control and could be fixed with better execution. Keane said he will stop taking cash compensation above the legally required minimum, and will instead take performance shares that are "worthless unless the three-year moving average of our share price achieves a compounded annual growth rate of at least 11 percent over a rolling six- to ten-year period."

In September, Cimpress acquired BuildASign, a large format printer, for $280 million. The company said that move helped increase gross profit and offset some of the declines in other areas.