Summary
- CSS Industries, Inc.'s dramatic stock price decline over the past year has been driven by struggling organic sales growth and compressed operating margins.
- The company's new $125 million secured revolving credit facility with JP Morgan Chase (admin agent), and BoA and Keybank (lenders) provides a soft signal for projected FYE 2020 operations.
- The future will likely not be as bad as many think, however, the company will also likely not return to historical operating margins. Reality will be somewhere in between.
I recently came across CSS Industries, Inc. (CSS), a business that designs, manufactures, distributes and sells seasonal, gift and craft products primarily to mass market retailers. If you yawned during that description, fear not, I did the same at first glance. It is a boring business that has existed in its current form since the mid-1980’s, though it has changed the niche businesses that it operates in numerous times since then. Beginning in the early 1990’s, it began to manufacture and distribute things like ribbons, bows, gift packaging etc. However, over the past few years the core business segments have been facing numerous competitive headwinds.
