American Greetings shares plummet as Q3 profit drops

American Greetings shares plummet as Q3 profit drops

Stock Market Predictions

(Global Markets) - American Greetings Corp's (AM.N) third-quarter profit dropped nearly 40 percent as it spent more on selling and marketing its greeting cards, and the company said its cash flow in fiscal 2012 would be hurt by higher expenses.

Shares of the company slumped 25 percent to $12.85 on Thursday in heavy trading, making it one of the top percentage losers on the New York Stock Exchange.

S&P Capital said it expects margin pressure for the company to continue and cut its price target on the stock to $14 from $21.

American Greetings third-quarter net income fell to $20.2 million, or 50 cents per share, from $32.2 million, or 78 cents per share, a year ago.

Revenue rose 8 percent to $463.6 million.

Selling, distribution and marketing expenses rose 19 percent to $140.1 million.

The Cleveland, Ohio-based company plans to spend more on selling and marketing its greeting cards.

For the fiscal year ending February 29, 2012, the company expects cash flow from operating activities to be about $90-$110 million, compared with its prior estimate of $125-$145 million.

(Reporting by Chris Jonathan Peters in Bangalore; Editing by Roshni Menon)