Orchard Brands has renewed a contract with R.R. Donnelley & Sons Co. While the value of the contract -- $175 million – was announced, the number of years it covers was not.
The contract calls for RR Donnelley to provide 100% of Orchard Brands’ catalog printing and postal logistics services for catalog mailings
The announcement comes on the heels of a $500 million, multi-year contract renewal with Publishing Group of America’s magazines. The contract life span was similarly not announced in that renewal deal.
“RR Donnelley’s leadership in co-mailing, innovative Variable Trim Binding technology, and postage optimization software tools will continue to deliver enhanced value to our catalog marketing programs,” said Maura Lyons, Orchard Brands’ VP of print production, in a statement.
Orchard Brands catalogs include Appleseed’s; Bedford Fair Lifestyles; Blair; Brownstone Studio; Coward; Draper’s & Damon’s; Gold Violin; Haband; Intimate Appeal; Lew Magram; Monterey Bay; Norm Thompson; Old Pueblo Traders; Sahalie; Solutions; The Tog Shop; Willow Ridge; and WinterSilks.
“We are very proud to have been chosen to renew and expand our relationship with Orchard Brands,” John Paloian, RR Donnelley’s COO said in a statement. “The integrated production and logistics platform that we have built is ideal for delivering catalogs and other merchandising materials with exceptional quality and precise timing. We continue to develop solutions tailored to the unique needs of catalogers and multi-channel merchants.”
The two contract renewals follow a rough year for Donnelley. In late February, it reported 2008 sales of $11.61 billion, and a net loss of $189.9 million, compared with revenue of $12.06 billion and a net loss of $48.9 million in 2007.
The Analyst’s Take: A dollar a year for 175 million years isn’t much of a win. No, this most likely isn’t the terms of the contract. In fact, if it is done on an “as needed” basis, with the $175 million guaranteed over a certain period of time, it may be difficult for Donnelley to give details. Still, some context would be appreciated. Especially if this represents less than Orchard Brands has spent annually during, say, the last five years. If the contract is an expansion, as Donnelley COO John Paloian said, why not trumpet that fact through hard figures?
