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Red Plum shines amid grim showing by Valassis

Free standing inserts remain a popular promotional vehicle, but weakness in other aspects of the Valassis business model have CEO Rob Mason vowing major changes after a third quarter sales decline.

Valassasis, best known by consumers for its Red Plum branded inserts in Sunday newspapers, said revenues for the quarter ended September 30, declined 6.6% to $524 million and earnings declined 24.5% to $27.7 million including $600,000 of restructuring costs. The company’s free-standing inserts, or FSI, business saw revenue increase 4.6% to $75.5 million due to growth in page volume.

The company said its overall weakness was attributed to a an anticipated decline in revenues in its Neighborhood Targeted segment resulting from the change in certain client contracts to a fee-based media placement model, as well as the discontinuance of the sampling and solo direct mail products. Without the effect of these changes, the company said its third quarter revenues would have increased 4.3%.

"Given our year-to-date results, I recognize a clear need for change. We are executing our plan to strategically refocus, restructure and right-size our company," said Rob Mason, Valassis president and CEO. "We project this plan will deliver approximately $28 million in annualized cost savings, putting our company in a better position to jumpstart and accelerate growth moving forward."

Until then, the company said it was lowering its profit forecast to a range of $2.74 and $2.84 a share from earlier guidance of between $3.05 and $3.20 a share.
 

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