You are here
Opinion: Shutterfly earnings report shows pivot is timely Earnings reports Opinion 

Opinion: Shutterfly earnings report shows pivot is timely

New Tiny Prints home page
New Tiny Prints home page

Shutterfly reported its second-quarter earnings report yesterday and the results indicate the photo-printing leader has a way to go in its on-going restructuring plans (detailed here).  All sales growth was driven by the Shutterfly Business Services (SBS) unit, for example, and consumer sales-per-order continues to weaken.

The SBS business may have tighter gross margins, but at least it is growing at a double-digit pace.

In February, based on market trends, Shutterfly announced a series of business changes (since completed), including boosting the Tiny Prints premium card and stationery brand, rebooting the Shutterfly Wedding Store, and shuttering the MyPublisher, TripPix, FavePix, and Shutterfly Pro Gallery services. The company also announced closure of satellite offices in Santa Clara, Calif., and New York, and plans to reduce headcount 13 percent.

Now that the company describes itself as a “online retailer and manufacturer of high-quality personalized products and services,” it’s clear it sees the future in the variable data printing space, rather than the traditional photo space. This is a prudent move, as digital printing platforms have essentially erased the differences between what was “professional” printing and what was “amateur” printing. Products like metal prints and large-size canvas – once only available in pro labs – are now available at discount processes from many outlets. Shutterfly’s own earnings report reflects this: Customers and number of orders grew 3% in the quarter, but average value of a consumer order declined 2% from $32.75 from $33.30. If anything, prices are not going to be trending upwards, either.

A necessary change in direction and earnings

It’s no wonder, then, that photo businesses of all sizes have dipped a toe (or more) in the B-to-B sales space. FastSigns has made inroads into the independent space by selling franchises to photo retailers like Fullterton Photographics and Sharp Photo and Portrait in Wisconsin. In fact, some of these have even opened multiple FastSigns locations. The leading North American buying group, IPI, has made commercial business and B-to-B sales a key component in its Print Refinery model. (Look for more on IPI and Print Refinery soon at The Dead Pixels Society.)

The challenge is, the commercial space has also become increasingly competitive. The big are getting bigger, as shown with last week’s purchase of Digital Lizard parent Creel, after a series of acquisitions. The internet has put everyone in the business and for many, price is king. Shutterfly may gain volume in commercial business, especially in key months when its seasonal photo printing business is fallow, but it will pay for it in lower margins.

It does look like Shutterfly management recognizes this, however, and is making the necessary infrastructure changes and hires to make the pivot successful.

Related posts

%d bloggers like this:
Skip to toolbar