In a direction of streamlining the company’s business CafePress Inc (NASDAQ:PRSS) announced that it has decided to divest from its existing art business. The company said that it has signed a definitive agreement with Circle Graphics, Inc. to sell its Art business in consideration of $31.5 million in cash.
Why is momentum shifting in PRSS? Read this analyst breakdown.
Divestment From Art
Louisville-based CafePress Inc (NASDAQ:PRSS) termed the agreement as a step towards divestment as the on-demand printing leader intends to optimize its product offerings and focus on its core business, CafePress.com. It informed further that the transaction is expected to conclude during the first quarter of 2015. However, no specification on timing has been set. The sold Art business consists of three CafePress brands, namely, ‘Canvas On Demand’, ‘Great Big Canvas’ and ‘ImageKind’. The Art business contributed 20% to the total revenue of CafePress’s in the year 2014. With this agreement, the company aims to progress on core objectives, which center around simplifying its business, building a strong balance sheet and aligning expenses with revenues.
Revival Plans Followed Softer Outlook
CafePress Inc (NASDAQ:PRSS) CEO Fred Durham said that the decision to separate from the Art business will help them to increase shareholders’ value and remain focused on business optimization. Durhan had hinted last year about plans to cut down low-performing products, increasing prices and lowering discounts in order to revive its business. Alongside providing details about the sale of the Art business, the company also released preliminary numbers for its fourth quarter results. CafePress Inc (NASDAQ:PRSS) said that it expects to post revenue in between $82-$84 million while earnings per share are estimated to be below analysts’ expectations. The company will release its fourth-quarter results on February 25, 2015.
Despite providing softer guidance, the shares of the online retailer head northward, recording a whopping gain of 33.80% to close the previous session at $2.85.
CafePress Inc (NASDAQ:PRSS) suffered from a deep correction just after the listing a few years back. The vertical phase of that correction that saw the stock dropping from the height of $22 to the $5 levels ended by 2013, followed by a multi-month sideways movement. The breakdown in 2014 created a new lifetime low around $2 but the correction still doesn’t look finished. The latest rally, aided by increased volume, may face strong supply pressure very soon, from the band of $4-$6.