CLEVELAND — American Greetings Corp. said Tuesday it will lay off 1,500 employees — 13 percent of its full-time work force — and close six plants as part of a restructuring plan after a $127.7 million loss in its fourth quarter.
The nation's second-largest greeting card company, which has been hurt by increased competition from the Internet and lower-priced cards, also lowered its fiscal 2002 earnings projections.
American Greetings' loss amounted to $2.01 per share on sales of $663.2 million. That compares with net income of $51.6 million, or 79 cents per share, last year.
Excluding a write-down of assets related to its investment in Egreetings Networks Inc. and a one-time tax item, the company earned $48.4 million, or 76 cents a share. Analysts surveyed by First Call/Thomson Financial had pegged operating earnings at 75 cents per share.
The layoffs are to be completed by February. Company spokesman David Poplar said about 250 jobs will be eliminated at the company's suburban Cleveland headquarters, which has 2,238 full-time workers.
The company has 11,633 full-time employees worldwide and thousands more in part-time merchandising and support positions.
The plants to be closed weren't named.
Morry Weiss, American Greetings chairman and chief executive officer, said the restructuring will result in "a greater focus on and responsiveness to the productivity needs of our retail partners."
Jim Spira, who joined the company as vice chairman to put together the restructuring plan, has been named president and chief operating officer.
Merrill Lynch analyst Justin Maurer in New York said this fiscal year will be crucial to American Greetings.
"The bottom line is that fiscal 2002 really is going to be a transition year for the company. People will not give them credit for it until they can come out the other end prove that they can gain benefits from it," Maurer said.
Sheldon Grodsky, an analyst with Grodsky Associates in South Orange, N.J., said the job cuts are about what was expected.
"They've gone pretty far with it," he said. "I don't think American Greetings is a bloodthirsty company. They've looked at the present and future and their cost structure had to come down."