Services Sector News

Services Stock Highlights: CSS Industries, Inc. (NYSE: CSS)

On 17 October Wednesday, CSS Industries, Inc. (NYSE: CSS) shares price traded between $13.04 and $13.35 during the last trading session above/below with +0.15% at $13.23. The shares recorded a trading volume 28,316 shares as compared to its average volume of 38,121 shares. The company has 9.12M shares outstanding and market value of 120.654M. Over the one year trading period, the stock has a peak price of $30.29 and its down is recorded at $12.90. The short ratio in the stock is 1.55 and the short float is around of 0.84%.

CSS Industries, Inc. (CSS) recently reported results for the quarter ended June 30, 2018, representing the first quarter of fiscal 2019.

Net sales in the first quarter of fiscal 2019 were $64.1M contrast to $48.3M in the first quarter of fiscal 2018, driven by the November 2017 acquisition of the Simplicity Creative Group business (“Simplicity”), which contributed net sales of $19.5M in the current year quarter. Not Including Simplicity, net sales in the first quarter of fiscal 2019 were $44.6M.

Gross profit was $11.6M in the quarter contrast to $11.8M in the previous year quarter and gross margin was 18.2 percent contrast to 24.4 percent in the previous year quarter. Adjusted gross profit was $17.1M for the quarter contrast to $15.0M in the previous year quarter. Adjusted gross margin was 26.7 percent in the quarter contrast to 31.0 percent in the previous year quarter. The decline in adjusted gross margin percent was Because of the mix impact of volume declines Because of the loss of high-margin programs in the craft and gift categories, as well as manufacturing variances carried in from the previous year as a result of lower production volume and focused inventory reductions, partially offset by the acquisition of Simplicity.

Planned Initiatives Update

The Company’s overall strategy is to grow profitable sales and improve return on invested capital (ROIC) through five planned pillars: defend the base business, identify adjacent product categories with a focus on brands, build an omni-channel business model, improve ROIC and build a collaborative One CSS culture. First quarter highlights related to these objectives included:

  • The Company has successfully exited, as planned, the transition services contract associated with the Simplicity acquisition.
  • In aligning with our planned pillars, the Company initiated a review of certain product lines to identify underperforming products, with the goal of reducing costs and improving working capital to enhance our long-term returns. As a result, in July the Company committed to a plan to exit its back-to-school sports licensing product line and also restructure its specialty gift product line, while revising its “go to market” strategy. This initiative will drive an approximate 75 percent reduction in SKUs within this area, allowing the Company to further rationalize its facilities footprint moving ahead. In conjunction with this change, the Company expects to incur inventory write-down costs between $1,000,000 and $1,500,000. These costs will be recorded during our second quarter of fiscal 2019.
  • The Company experienced positive results from the implementation of its new omni-channel growth strategy. As a result of the new strategy, sales attributable to a major on-line retailer grew at a double-digit rate in the first quarter.
  • The Company reported its decision to consolidate its Simplicity and McCall operations in the United Kingdom. The consolidation is predictable to be complete by the second quarter of fiscal 2019, improving the effectiveness of the combined brands while also delivering lower costs. The Company expects to incur about $0.3M of exit costs associated with this consolidation, which will be recorded during our second quarter.

EPS growth ratio for the past five years was -34.50% while Sales growth for the past five years was -0.10%. CSS Industries, Inc., a consumer products company, designs, manufactures, procures, distributes, and sells seasonal, gift, and craft products principally to mass market retailers in the United States and Canada.  Return on equity (ROE) was noted as -18.00% while return on investment (ROI) was -12.00%. The stock’s institutional ownership stands at 78.50%.