Hallmark reports a 2 percent decline in 2013 revenue

03/12/2014 10:00 PM

03/12/2014 10:00 PM

Hallmark Cards Inc. on Wednesday said 2013 revenue fell 2 percent to $3.9 billion, as strong results in its Crayola product line were offset by declining sales of greeting cards, gift wrap and gift items.

The Kansas City-based greeting card giant also said profits improved last year from 2012 results, but the privately held company did not disclose how much earnings increased.

Hallmark in recent years has been transforming itself to become less reliant on traditional greeting cards and other paper products, and the 2013 results “reflect shifts in how the company is managing all aspects of its business in response to the changing demands of the marketplace,” Hallmark president and chief executive Donald J. Hall Jr. said in announcing the annual financial report.

“Hallmark is made up of a diversified portfolio of businesses that are all strong contributors to the company’s financial and brand health,” Hall said in the statement. “We have two of the world’s most trusted brands in Hallmark and Crayola and a branded entertainment network that is reaching a growing number of U.S. households. The balance of our total portfolio and the opportunities that lie within each of the businesses give me confidence in our future.”

In reviewing 2013 results, the company said Hallmark North America revenue from the sale of greeting cards and other products fell 4 percent last year compared with 2012. However, the company noted that it took steps to improve efficiencies, including streamlining greeting card product development, integrating Canadian operations into its U.S. business and consolidating manufacturing facilities.

A bright spot was Hallmark’s Crayola revenue, which climbed 3 percent in 2013 thanks to strong back-to-school and holiday season results. Crayola beefed up its presence in Japan and China last year and plans to expand into other “select international markets” in 2014, Hallmark said.

Other operational highlights:

• Hallmark said consumer reaction to its new retail concept store, HMK, has been “positive” since the first store opened on the Country Club Plaza last October.

As a result, two additional HMK locations will open this spring. Next month, HMK will open in the Dallas-Fort Worth area in Southlake Town Square, with the second opening planned for June in Denver’s Cherry Creek Shopping Center.

• Crown Media, which is largely owned by Hallmark, reported an 8 percent increase in 2013 revenue from 2012. Crown operates the Hallmark Channel and Hallmark Movie Channel.

Hall noted that Hallmark Channel was the top cable network among households and women in the 25-to-54 age category for weekend prime time viewing during the holiday season.

• Hallmark International’s revenue declined 3 percent “because of the challenging business environment in the U.K. and Australia.”

Hallmark recently announced it will transfer its gift wrap manufacturing from Bradford, England, to its production center in Leavenworth. The move will cut about 300 jobs in the United Kingdom. No jobs will be added in Leavenworth.

• Hallmark’s real estate subsidiary reported “essentially flat” revenue last year compared with 2012. The company last year announced plans to close its Halls department store on the Country Club Plaza in 2014 and revamp its other Halls store at its Crown Center development. The company said it expects “increased visits” once the remodeled Halls on Grand opens later this year.

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