The group decentralised its operations at the beginning of the year, which resulted in 3,000 employees being reassigned to the Vistaprint business. Restructuring at the business unit will involve an as-yet-unspecified number of job losses and cost between $15m-$17m (£11.5m-£13m).
Chief executive Robert Keane said: “Following more than six months of experience with their newly integrated organisation, the Vistaprint leadership team has taken the difficult but appropriate decision to reduce Vistaprint headcount and other operating costs, simplify operations and even more closely align functions to increase the speed of execution.
“We believe these changes will improve the steady-state free cash flow of this business and, importantly, free up capital to reinvest in other areas of Vistaprint that provide the greatest benefit to our customers and our long-term shareholders.”
The firm said that simplifying the Vistaprint structure would cut operating expenses at the business by $20m-$22m.
It is currently consulting with employees over the proposals.
Overall sales at Cimpress increased by 27% to $563.3m in the three months to 30 September. Sales on a constant currency basis, and excluding the effects of acquisitions and divestments (it acquired National Pen at the end of last year, and sold Albumprinter in August), were up 12%.
Gross margin fell from 52% to 49.6%, because of the introduction of new low-margin products at Vistaprint “that are not yet at scale”, combined with growth at its Upload & Print division, which operate on lower gross margins.
Sales at Vistaprint were up by 11% to $319m, and profits increased from $25.3m to $30.9m but gross margin was down year-on-year.
“While these investments [in new products and services] put pressure on current period profitability, we expect they will continue to help us attract higher-value customers, improve customer loyalty and grow gross profit dollars over time,” the firm said.
Q1 sales at the group’s Upload & Print division rose by 22% (16% at constant currency) to $160.4m, while profit margins slipped from 10% to 9%.
Cimpress also said that decentralisation had created a tighter connection between the division’s customer-facing teams and its manufacturing facilities, and made the business more agile.
“We continue to see opportunities to shift production of certain products to lower-cost and/or higher quality options through the mass customisation platform. The current benefits remain small, but we expect them to begin to grow through the fiscal year.”
Sales at National Pen were $59.7m and it made a profit of $1.2m. The business is seasonal and typically makes most of its profit in the December quarter.
The ‘all other businesses’ division, which includes corporate solutions, emerging markets, and which had included Albumprinter, posted sales up 7% to $28.1m, and reduced its losses by $2.2m, to $7.6m.
The majority of the Vistaprint redundancies and cost reductions are expected to take place over the next couple of months.
Keane said that overall, the business had got off to a "solid start" for its new financial year.
