Count Sussex-based Quad/Graphics Inc. as among the companies hit hard by the coronavirus in the second quarter.
The printer and marketing services company reported $585 million in net sales during the quarter, a 38% drop from the same period last year. The company’s net loss widened to $23.5 million from $14.8 million last year.
Quad attributed the drop to the economic impact of COVID-19 shutdowns, declining print industry volumes and pricing pressures. The sale of a packaging plant in Nebraska in January accounted for 2 percentage points of the decline.
The retail inserts business was hardest hit during the quarter, down around 55%, according to Joel Quadracci, chairman, president and chief executive officer of Quad.
Catalog and direct mail businesses were off about the same as the general economy at 33%. The company's packaging and in-store groups continued to do well, he said.
“Visibility is horrible right now, but I’m a little bit comforted that big retailers, and small retailers, have taken it upon themselves to demand that people wear masks as they go into the store, because I don’t think there’s much of an appetite to close the economy again,” Quadracci said.
The return of customer demand has come in fits and starts, he added, noting some customers have seen the pandemic as an opportunity to move away from marketing tools like retail inserts. In several cases, those customers have reversed course, including one that came back after just two weeks, Quadracci said.
Quad executives touted the company’s ability to quickly adapt to the conditions brought on by COVID-19, noting Quad had temporarily reduced costs by more than $325 million on an annualized basis.
The actions required to reach those savings included reductions in direct, indirect and selling and administrative employees by more than 1,100, salary reductions for more than 1,200 employees, temporary furloughs, the permanent closure of a plant in Taunton, Massachusetts, suspension of domestic and international travel, capital expenditure reductions and suspension of the company's quarterly dividend.
