Fixing Creative Homeowner is “our highest priority right now,” James Conway, CEO of Creative's parent company Courier Corp., assured analysts during a third-quarter conference call. In the just concluded period, Creative sales plunged 45%, to $3.7 million, due to a combination of high returns and the slump in the housing market that has dried up demand for Creative's home design, decorating, landscaping and gardening titles.
As a result of the softness in the market, Creative cut its payroll by $1 million in the quarter and returned its focus to its core product, a move that is expected to cut expenses by another $1 million. With the softening of Creative's business—sales were off 25%, to $15.7 million, in the first nine months of the fiscal year and it had a pretax loss of $5.2 million—Courier took a $23.9 million charge to writedown the value of Creative. Courier acquired the company in April 2006 for $37 million.
Despite Creative's problems, Conway defended the book manufacturer's decision to buy the company. “Creative Homeowner is a fundamentally sound business that we happened to buy just before the downturn in the housing market,” Conway said. As for adding Creative to its Dover and REA publishing units, Conway said, “The synergy between manufacturing and publishing has added value by plugging holes in plant utilization.”
