Shares of Time Inc. slid 8.4 percent to $14.33 Thursday, as the company reported lower-than-expected quarterly revenue due in part to the troubled print market.
Despite growth in digital advertising revenue, the publisher, which has been in the process of reorganizing its business side, was unable to make up losses in print advertising and dips in circulation.
The publisher of magazines such as Time, Fortune, Sports Illustrated, InStyle and People, slashed its annual guidance for the year, as a result of the still turbulent print environment, and said it expects to incur $35 million in restructuring costs related to the recent reorganization.
For the second quarter ended June 30, Time Inc. said net income fell 25 percent to $18 million, or 18 cents a diluted share. This compared with year-ago income of $24 million, or 22 cents a share. Excluding items, the company earned 22 cents a share.
Quarterly revenue slipped 0.5 percent to $769 million versus $773 million, a year earlier.
Analysts were looking for EPS of 15 cents on revenue of $782.5 million.
Drilling down deeper into Time Inc.’s revenue picture, sales from print advertising declined 12.8 percent to $299 million, while digital ad revenues grew 64.9 percent to $127 million. Subscription sales slid 7.2 percent to $154 million, as newsstand sales dipped 9.8 percent to $74 million and revenue from circulation decreased 7.1 percent to $236 million.
Time Inc. chairman and chief executive officer Joe Ripp said on a call Thursday morning to investors: “In a world that is increasingly becoming mobile first and is dominated by Facebook and Google the pace of change is accelerating. There is a tremendous sense of urgency to our transformation work. We completed our spinoff just over two years ago and began our transformation journey.”
That journey is still underway. The company reorganized its business side to clusters versus magazine titles. Ripp said the teams will “service brand ambassadors and promote brand-specific advertising solutions.”
Ripp said on the call that 500 salespeople at Time Inc., who were focused primarily on print, have been impacted by the changes. In some cases, their jobs have been eliminated and they were given a new focus, but he didn’t put a number on how many people were (or will be) let go in the reshuffle. Sources said Time Inc. has let go of about 110 employees from across the company — not just the sales group.
A spokesman from Time Inc. declined to comment on the layoff number, but added: “We have not identified any further restructuring actions outside of the expected [$35 million] charge we announced today.”
The ceo did note that the new structure, which includes a rehaul of its editorial, publishing and corporate teams, “enables” the firm to “integrate” across “edit, digital, brand management and native [advertising] solutions.”
Nonetheless, Time Inc., which brought in $3.10 billion in revenue in 2015, said it expects 2016 revenue to be between flat to up 1.5 percent higher than a year ago, compared with growth of between 1 and 5 percent it previously forecasted. Analysts are looking for revenue of $3.16 billion.