Hallmark's Second Century Off to a Good Start

Consolidated net revenue, earnings increase in 2010

Mar 10, 2011, 14:46 ET from Hallmark Cards, Inc.

KANSAS CITY, Mo., March 10, 2011 /PRNewswire/ -- Citing solid sales from innovative products in its North America business and strong performance from its Crayola® subsidiary, Hallmark Cards, Inc. today announced worldwide consolidated net revenue of $4.1 billion for 2010, a 3 percent increase over the previous year.

The privately held company's four operating businesses also experienced an increase in earnings over the prior year, a result of revenue gains, process improvements and savings realized in 2010 from cost-reduction actions taken in 2009.

Hallmark President and CEO Donald J. Hall, Jr., attributed revenue growth to a continuing focus on innovation and enthusiastic consumer response to the resulting new products, as well as actions taken in 2009 to reshape the company's long-term cost structure.

"These results indicate we are on the right path with our strategies, and that we are gaining momentum as we begin our 101st year," Hall said. "We will continue to focus on delivering profitable, sustainable revenue growth through product innovation while also closely managing costs."

Hall also called out the impact of the company's 2010 centennial milestone in positively engaging employees.

"I'm proud of and thankful for the contributions of employees in helping us make significant progress in a tremendous centennial year at Hallmark," said Hall, who as grandson of Hallmark founder J.C. Hall represents the third generation of family leadership at the Kansas City, Mo.-based company.

Innovation leads the way

In recent years the company's two largest operating units, Hallmark North America and Crayola, have made consumer-inspired innovation the foundation for growth. Positive 2010 revenue results offer a glimpse of the possibilities this strategy creates, Hall said.

Revenue gains in Hallmark North America were due in part to sales of Hallmark Recordable Storybooks introduced late in 2009 in the Hallmark Gold Crown® specialty store network. Strong consumer response to this new category of children's storybooks grew throughout 2010 as new titles were added; they, along with a growing portfolio of technology-enabled greeting cards and interactive plush, as well as ornaments, gift wrap, party and promotional items, together delivered Hallmark's strongest holiday season in all channels of distribution since 2007.

Crayola, which has set a similar course to grow through innovation and expansion beyond its iconic core crayon business, wrote an 8 percent revenue increase over 2009. Fueled by continued product innovation, more than half of Crayola's U.S. revenue now is generated outside the back-to-school season, the peak selling period for crayons and markers. Innovations from Crayola included the Color Wonder Sound Studio, which was named Activity Toy of the Year at the International Toy Fair.

In other operating businesses, Hallmark International faced difficult economic conditions in a number of its key markets, but finished the year only slightly below 2009. Full-year revenue for Kansas City real estate subsidiary Crown Center grew by 9 percent thanks to improved hotel business driven by citywide conventions.

On March 3, publicly held Crown Media reported a 3 percent increase in revenue resulting from a successful holiday season on Hallmark Channel and Hallmark Movie Channel, along with continued development of the Hallmark Channel Home programming block, which increased both advertising and subscriber revenue.

"We are thinking more broadly about the range of consumer needs the Hallmark brand serves, and we're confident that the trust consumers place in our brand gives us permission to meet more of those needs and broaden our range of solutions," Hall said.

"Life is a special occasion"

That broader range of needs and solutions is reflected in an effort launched earlier this year to expand consumers' definition of the Hallmark brand. The company and its iconic brand are best known for greeting cards, television programming and ornaments at holidays and special occasions – but also are relevant in many other forms, for any-day situations, Hall said.

A new "Life is a special occasion" brand campaign launched earlier this year focuses on the moments between the milestones to drive home the point that Hallmark can inspire emotional connections any day, in ways that go beyond greeting cards.

"People tell us the best parts of their lives are actually the small moments that happen in between the big milestones, when they can pause and 'be in the moment.' We believe the Hallmark brand can help people make the most of those little moments," Hall said.

The intent is to expand the role of the Hallmark brand in consumers' lives, he added, acknowledging it will take several years to achieve this goal.

"We firmly believe this broadened view of our brand and a relentless commitment to consumer-inspired innovation, will unlock great opportunity and fuel future growth for Hallmark."

About Hallmark

Hallmark makes the world a more caring place by helping people express what's in their hearts and spend time together – a privilege few other companies in the world enjoy. Hallmark greeting cards and other products are found in more than 40,000 retail outlets in the United States, including the network of flagship Hallmark Gold Crown® stores. The brand also reaches people online at Hallmark.com and on television through Hallmark Hall of Fame original movies and cable's top-rated Hallmark Channel. Worldwide, Hallmark offers products in more than 30 languages available in 100 countries. This privately held company is based in Kansas City, Mo., and in its 101st year is led by the third generation of the founding Hall family. Visit http://corporate.hallmark.com for more details.

SOURCE Hallmark Cards, Inc.



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