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To: HandsOn who wrote (25612)	2/24/1999 11:17:00 PM
From: kendall harmon	Respond to of 120523

AM-Reuters news after the close. American Greetings stock pounded by forecast By Marguerite Nugent CLEVELAND, Feb 24 (Reuters) - Greeting cards company American Greetings Corp. (NYSE:AM - news) said on Wednesday a new plan to boost its sluggish card sales will cut into sales and profits next fiscal year, triggering a 32 percent slide in its stock price. American Greetings' stock fell $11.25 to $23.81 per share in heavy trading on the New York Stock Exchange, where it led the list of the day's percentage losers. Chairman Morry Weiss said the plan is aimed at cutting its retailers' overstock of old merchandise, which Weiss hopes will clear the way for the company to keep store shelves stocked with better-selling new card designs. He expects the move to enhance profitability down the road and help it achieve its long-term goals for earnings growth and return on equity. In the short term, however, the move will reduce sales in fiscal 2000 by $100 million and cut earnings per share to between $2.00 and $2.10 from the $2.97 analysts polled by the research firm First Call Corp. had been expecting. ''This is a nice stable company. I think the stock is down so much because they usually don't surprise,'' said Eric Bosshard, an analyst at Midwest Research. Analysts believe American Greetings is taking the right steps to make it more competitive in a very competitive market. ''But this market doesn't have a lot of patience and it doesn't like surprises,'' Bosshard said. He noted that the company faces the challenges of new trends and slower unit growth because of electronic cards and the ability to communicate by e-mail, among other things. In addition, the nation's largest card maker, privately- held Hallmark, has ratcheted up the competition by introducing a 99-cent card into a marketplace where the average price for a card is $2.50. American Greetings is the largest publicly held greeting card company. ''We still rate them a buy,'' said Rudi Hokanson, an analyst with CIBC-Oppenheimer. ''The basic business plan makes sense, but taking a hit of almost $1 a share on earnings is something you have to look at,'' he said. American Greetings reiterated it expects to report fiscal 1999 earnings of $2.60 to $2.70 per share on March 25 when it releases results for the year, which ends February 28, 1999. The company struggled through the second and third quarters of this year with lower sales compared to last year. After rising 2.7 percent in the first quarter, sales in the subsequent two periods this year slumped slightly from a year ago. ''Combined, these improvements enable us to implement an even more efficient retail distribution system,'' Weiss said. ''While we'd prefer to do this without next year's downturn in earnings, this initiative is in the best long-term interest of our shareholders,'' he said. Weiss said American Greetings believed the plan will increase its chances in the long term of achieving a 15-percent annual return on equity and earnings per share growth of 10 percent. He also told analysts during a conference call that the accumulation of inventory at retail stores had become an obstacle to American Greetings moving new merchandise. Weiss said he expects by 2001 earnings will return to the $2.60 to $2.70 level anticipated for fiscal 1999. He said the end to the company's Y2K program will also boost results, as will a further repurchase of shares, which he did not specify. Since June 1997, the company has bought back more than 7.5 million shares. The company said the board has authorized the repurchase of another 5 million shares.