Hallmark Cards to eliminate up to 250 jobs and drop its party ware line

11/04/2013 4:32 PM

11/05/2013 12:44 PM

Cinderella paper plates have turned into a proverbial pumpkin as far as Hallmark Cards sales go.

Hallmark on Monday announced it was exiting the party ware business — which it has been in for more than half a century — because of flagging revenue.

The end of the party ware business was one of two big announcements Monday by Hallmark. It also said it was streamlining its core greeting-card business designed to get cards on store shelves faster.

Together, the two changes will eliminate up to 250 jobs. That’s more than 7 percent of the 3,200 jobs Hallmark has in the Kansas City area. The company has about 12,000 employees worldwide.

The party ware business will be dropped at the end of 2014 when the company will no longer will make and market party plates, paper cups, napkins, table covers and party favors.

The move will eliminate 125 to 150 jobs over the next 15 to 20 months. The streamlining of its card business will take effect immediately and will eliminate about 100 positions this year.

Buffeted by the recent recession, the Internet and changing consumer habits, Kansas City-based Hallmark has been paring its workforce and realigning operations for several years. Company officials said the strategic moves required difficult employee decisions but were necessary to keep Hallmark agile and competitive.

“We never approach decisions that impact people lightly or without thoughtful consideration, but business realities require us to become a smaller, leaner organization,” said Dave Hall, president of Hallmark North America. “These steps will help us focus on the strategies most critical for building a strong, healthy future for the company.”

Hallmark’s core products continue to be greeting cards, gift wrap and ornaments. But it also relies on revenue from subsidiaries, such as Crayola, and on stronger results from the Crown Media Hallmark Channel and the Hallmark Movie Channel.

The company found that consumers were tending to buy lower-cost paper party ware in discount stores and that the business segment wasn’t meeting Hallmark’s revenue expectations.

“We’ve seen limited growth there, so it makes sense to focus on other areas where we have more sustained, profitable growth,” said Hallmark spokeswoman Julie O’Dell.

Although Hallmark Gold Crown stores won’t carry the party ware products anymore, the company is working with its licensing partners, such as Disney, Pixar and Marvel, to make other arrangements to sell the products.

“People will still be able to find those products at our other (corporate) customers like Wal-Mart and Walgreens,” O’Dell said. “We are working with those customers to help find suppliers in an effort to minimize impact at the shelf level.”

Even now, the widest selection of Hallmark party products can be found through party specialty stores and mass retailers.

Hallmark will retain licensing rights to just a few strong-selling party ware products, such as plastic cups, she said.

Although consumers won’t be as aware of the other change — streamlining the card development process — O’Dell said it amounted to “total reinvention of how we invent and produce greeting cards,” and would begin in January.

In a statement released late Monday, the company said that “virtually every step of the process will be affected, including product strategy, creative development, space and assortment planning, demand and inventory management, and project management.”

That means that the realignment will affect card designers and business-side employees.

Staff reductions will include severance packages for employees who are let go. Some employees may be reassigned to other jobs in the company, if available. Some job eliminations will occur through attrition and retirements.

Since 1998 the privately owned company, which doesn’t publicly reveal profits or losses, has reported consolidated revenue of $4 billion to $4.4 billion a year. In March this year, it reported 2012 revenue of $4 billion, down 2 percent from 2011. The $4.4 billion high was last reported in 2007.

As consumers have shifted from buying and mailing paper greeting cards, Hallmark has relied more on product licensing and subsidiary companies to generate a larger but unspecified revenue share. Still, the search for greater efficiencies from its core “social expression” business, which includes gift wrap and party ware, continues to fuel layoffs.

The company had a worldwide employment high of 21,500 in 1999. By the time of its centennial in 2010, payrolls had shrunk by 7,500. Centennial employment at its Kansas City headquarters was 3,700, down from a peak of 5,600.

A series of voluntary retirements or buyouts, outsourcing contracts, plant closings or business consolidations have been used to cut staff.

Hallmark earlier this year converted about 315 employees to employees of Guidant Group, a business process outsourcing company. It also began to eliminate about 300 positions in its Canadian operations, and it pared manufacturing employment in Kansas by about 300 jobs by closing its Topeka greeting card and envelope plant.

Also, Halls, the company’s high-end retail operation, recently announced that it intended to reduce its 230-worker payroll by about half next year when it closes its Country Club Plaza store. The smaller retail workforce will work at a remodeled Halls Crown Center location.

Last year the company announced a voluntary job-cut program to shed 300 to 400 positions. A larger reduction in force was set in motion in 2009, when up to 750 positions were targeted for elimination.

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