Harte-Hanks' Shoppers business drops further

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With Harte-Hanks Inc.'s Shoppers business continuing to deteriorate in the first quarter ended March 31, the direct marketing services company reported a 5.1% drop in revenues for a total of $268.5 million.

By segment, direct marketing revenue grew 4.6%, with the high tech/telecom vertical producing year-over-year double-digit revenue growth, the financial and retail verticals flat and the pharma/healthcare vertical declined by approximately 10%.

The Shoppers business, which began a downturn last year, posted a revenue decline of 20.1% in the first quarter and operating income was down 58.9%. Fourth quarter revenue for The Shoppers business was down 15.8%

As a result of continuing weak market conditions in California and Florida — where The Shoppers advertising circulars are distributed — the company reduced its Shoppers workforce by more than 5% in the first quarter, bringing the total reduction in The Shoppers workforce to more than 12% since the first quarter of 2007. Harte-Hanks said it is continuing to look at ways to further reduce its cost base in The Shoppers business. However, it believes the business will return to growth once the economies in these states show signs of stability.

In an interview earlier this month, CFO Doug Shepard said recent cutbacks and a decision to close an East Coast fulfillment center are part of a reassessment of company functions. Harte-Hanks is seeking to “realign its operations to better serve customer needs,” Shepard said.

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