Earlier this year Cigars International, the world’s largest cigar retailer, upgraded its IT infrastructure including its enterprise resource planning (ERP) and warehouse management system. The implementation did not go well as customers were placing orders that the retailer was not seeing and as such not fulfilling.
The issues caused STG to downgrade its financial guidance in May.
Overall, the company’s revenue is down 2.6 percent year to date, while EBITDA is down 7.5 percent. The May announcement indicated the company expected EBITDA to show 4-8 percent negative growth for the year, compared to the company’s original expectation of 1-3 percent.
The company says the issues “have been stabilized, whereby the customer service is improving and the focus is now on customer acquisitions, win-back campaigns, inventory availability and increased productivity.”
However, STG says the new systems have not yet achieved their expected cost savings and the customer outreach efforts, including discounts and free shipping, are hurting its bottom line.
“The negative price/mix of 1.0 % for the category was driven by both General Cigar as well as Cigars International. Price increases in the branded business were not enough to compensate for mix changes, and special discounts and promotional activities in Cigars International continued to dilute the price/mix impact for the category, although to a smaller extent than in the previous quarters.”
http://halfwheel.com/stg-announces-q3-results-confirms-cigars-international-expansion/211041
