Cimpress (asi/162149), the parent company of Vistaprint and National Pen, increased sales in its recently ended fiscal-year third quarter but posted a nearly $72 million net loss for the three-month period.

The Top 40 promotional products distributor reported that sales for the quarter ended March 31 tallied $657.41 million, a 14.6% increase over the same timeframe the year before. For the first nine months of Cimpress’ fiscal year, total global revenue across all divisions reached $2.16 billion, a year-over-year rise of 11.5%.

Robert Keane, Cimpress

Despite the strong sales, Cimpress experienced a loss of $71.8 million, or -$2.75 per share, in the third quarter. The performance was worse than the prior year’s third quarter, when the Dundalk, IE-headquartered company had a loss of $39 million, or -$1.50 per share.

Operating loss for the quarter was $28.4 million, a steeper loss than the $15.7 million seen in the previous year’s third quarter. Earnings before interest, taxes, depreciation and amortization were $33.6 million, down from $55 million in the same quarter last fiscal year. 

The losses were a result, in part, of a $19.4 million increase in advertising expenses, increased investment in the company’s Vista division and teams, a rise of $3.8 million in restructuring costs related to improvements at National Pen, and a $3.2 million increase in share-based compensation (SBC) expenses.

The net income drop was also propelled by “a $25.6 million year-over-year increase in income tax expense as the result of a tax expense of $29.6 million to establish a partial valuation allowance on deferred tax assets, primarily due to Swiss tax reform benefits recognized in FY2020 that we no longer expect to fully realize,” Cimpress said. “This was partially offset by decreased interest expense and increased non-cash, non-operational currency gains.”

Through the first nine months of its fiscal year, Cimpress is running a loss of $23.7 million, or -$0.91 per share. Through the first nine months of the previous fiscal year, Cimpress’ loss was $17.5 million, or -$0.67 per share.

Cimpress’ Vista division, which includes its flagship brand Vistaprint, a global web-based seller of print and promo products, increased sales by 8% during the third quarter to $349.2 million.

“We passed a critical milestone this quarter with the successful launch of our new modern, flexible technology platform in the United States, and we have continued to launch in other countries with now approximately 90% of our bookings on our new platform,” Cimpress CEO Robert Keane said of Vista. “Vista can now start to transition to an era of continuously improving the customer experience by leveraging capabilities that the new platform enables.”

National Pen, a former Top 40 promo distributor before being acquired by Cimpress, increased sales in Q3 by 16% to $72.24 million. “During the past quarter,” Keane noted, “National Pen made a decision to move its European production operations from Ireland to the Czech Republic, which we expect will significantly improve the speed and cost of delivery to European customers when the move is complete about a year from now.”

With estimated 2020 North American promo product revenue of $429.3 million, Cimpress ranked sixth on Counselor’s most recent list of the largest distributors in the industry.