CINCINNATI -- Gibson Greetings here expects to report a loss for the third quarter rather than the profit Wall Street analysts had been anticipating.
t $20 million in Thanksgiving and Christmas card products that typically would have been shipped during September will instead be delivered to retailers in October, pushing revenues into the fourth quarter.
Frank J. O'Connell, Gibson's chairman, president and chief executive officer, acknowledged relying on outside contractors for packaging of holiday cards created "a bottleneck in orders." But he "remains confident that the move to outsource manufacturing was the right move in today's competitive marketplace."
Earlier this year Gibson decided to outsource the production of all its greeting cards and gift wraps, which resulted in more than 400 Gibson employee layoffs.
O'Connell said retailers were notified of delays in the shipping of some $20 million in seasonal products, which a company spokesman told SN are slated to go up on card racks well before Halloween and in time for the start of the holiday season.
The manufacturer said it has also added more packaging suppliers to avoid a repetition of such problems in the future.
Supermarket retailers questioned by SN said the delay in holiday cards wasn't a concern as long as the merchandise arrived in October in time for the start of Thanksgiving promotions.
It won't be a problem for Supervalu retailers, said a source at the Minneapolis-based wholesaler's Midwest warehouse who asked to remain anonymous.
"We haven't heard a whole lot of rumblings from retailers about the late holiday cards. Traditionally, if this was a problem we would have heard something. These seasonal cards won't go up until after Halloween anyway," added the source.
Ray Wallace, the director of nonfood at Cub Foods' Georgia division, Lithia Springs, Ga., doesn't expect any downside to the delayed seasonal cards. He also said outsourcing production has resulted in better-grade products. "Actually, we've found an improvement in card quality from Gibson's outsourcing," he said.