5/1/2023 0 Comments Shutterfly writedown lifetouchWe’re making significant changes to ensure that we have a steady pipeline of fresh relevant promotions. In particular, we saw the successful promotions we launched a year or more ago declined in their effectiveness as we repeated them too many times. North also acknowledged the company relied too heavily on repeat promotions to draw buyers: Aside from constant seasonality, the largest impact on revenue and customer growth came from the continuing mix shift away from free promotions and towards paid purchases, but also from less effective paid promotions. In addition, the continuing strength in our cards and stationery business which strongly benefited in Q1 and Q2 did not benefit Q3 as much, given the seasonally low mix of the category. As expected we comped the shutdown of the Wedding Paper Divas website in Q3, which took place towards the end of the third quarter of last year. Q3 was impacted by comps and seasonality in two ways. Let me expand on each of these factors briefly. I’ll highlight two factors in particular first, our promotional strategy didn’t deliver enough fresh, relevant promotions in Q3, a period when we need to work hardest to get – to engage customers given the lack of holidays secondly, in the face of continuing cost increases in paid online channels we need to move faster to develop additional cost effective mechanisms to acquire new customers and engage existing customers. We struggled with customer growth in Q3 and while seasonality and year-over-year comps played a role, the most important levers to achieve better results remain within our control. In a transcript of the analyst call, Christopher North, president and CEO, reinforced his past statements the company would be moving past freebie promos in its consumer business: Christopher North, CEO, Shutterfly to consolidate volume in existing Shutterfly plants. The company also announced it will close Lifetouch facilities in Loves Park, IL, and Bloomington, Minn. In particular, the company highlighted contributions of its newly acquired Lifetouch school-photo business but the consumer business dropped 6 percent in the quarter. ![]() The company’s shares dropped more than 12 percent in after-hours trading because revenues were below analysts’ consensus of $377.5 million. Shutterfly reported a third-quarter net loss of $73.5 million, compared to last year’s $25.6 million loss, on net revenues of $368.8 million.
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