Advanced Marketing Services, which earlier this month announced that fourth-quarter and year-end results would be below expectations, reported total sales of $911.6 million for the year ended March 31, a 21% increase over fiscal 2002. The inclusion of 10 months of sales from Publishers Group West, as well as higher sales from its domestic wholesale customers and international operations, contributed to the revenue increase.
Despite the sales gain, net income fell to $11.2 million from $23.1 million. AMS's fourth quarter was particularly difficult—the company reported a net loss of $4.4 million, compared to earnings of $3 million in last year's final period. Approximately half of the loss in the quarter was attributed to higher-than-expected returns from its warehouse customers as well as in PGW. The balance of the loss was due to expenses associated with termination of its Safeway business in the U.K., announced earlier this year.
Company CEO Michael Nicita said AMS was "disappointed" in both its fourth-quarter and year-end performance. A weak sales environment, which increased the return rate from 22% last year to 26% this year, as well as system implementation issues, resulted in higher-than-expected costs in fiscal 2003, Nicita said. He added that, in recent weeks, the company has "seen some evidence of strengthening sales," while its systems are performing to expectations.
AMS chairman Charles Tillinghast said that despite the sluggish economy, the company expects earnings growth in fiscal 2004, adding that profit improvement should be strongest in the second half of the fiscal year, when cost-reduction programs begin to take effect. Objectives for the year include expanding distribution business through PGW and making niche publishing purchases.
