Demand for company-branded apparel, stationery and other promotional products has waned dramatically during the pandemic. The number of orders processed by 4imprint (FOUR) over the six months to June dropped by two-fifths to 470,000 – sending revenues down by more than a third to $266m (£203m). In turn, pre-tax profits plunged from $19.5m to just $30,000.
4imprint has reacted to the crisis by “recalibrating” and significantly cutting back on marketing activities, which have been central to its growth over the years. Having stopped catalogue circulation and mailings, it put out two new TV campaigns with “contextually appropriate messaging” to new customers – capitalising on much lower airing costs during lockdown. That rerouting of the budget meant that overall marketing expenditure dropped from $41.1m to $9.5m.
The group’s control of overhead costs and the cancellation of bonus compensation – as well as the suspension of the dividend – have allowed 4mprint to maintain a decent level of liquidity, with cash of $37.5m and an undrawn committed bank facility of $20m.
For now, consensus estimates are for adjusted EPS of 15.2ȼ in 2020 – down from 120ȼ in 2019, according to FactSet.
