Deluxe Suffers As America Stops Writing Checks
Deluxe Corp.’s revenue slipped from $377.1 million in first-quarter 2008 to $339.5 million in first-quarter 2009. Similarly, the company’s net income fell from $27.3 million to $12.5 million. The most recent quarter ended March 31.
Within its business units, Small Business Services revenue dropped from $211.8 million a year ago to $193.3 million due to a drop in demand for checks and forms, an unfavorable Canadian dollar exchange rate and general soft economic conditions. The unit took a $6.6 million operating loss, compared to earning $21.8 million in operating revenue a year ago.
Financial Services revenue felt the sting of “lower check writing and turmoil in the financial services industry,” according to a press statement accompanying the firm’s first-quarter earnings. The unit’s revenue dropped from $113.9 million to $102 million. But its operating income rose from $19 million to $19.6 million due to cost reduction initiatives.
Direct Checks revenue was $44.2 million, compared with $51.4 million a year ago, while operating income slipped from $14.7 million to $14.2 million. Just as with the other units, the company attributed this to “the continued decline in check usage and a weak economy.”
So what is Deluxe doing to mitigate this? In April, it launched new e-commerce platforms designed to allow better cross-selling, and is hoping to benefit from partnership arrangements as a result of its C I Host acquisition. It is also transitioning three fulfillment centers and repositioning its channel and sales support structures.
The Observer’s Take: Leave aside home payments, whether rental or mortgage: When was the last time YOU wrote a check? Ah. Thought so.
