Shareholders gather at Transcontinental Inc.'s annual general meeting on Thursday in the wake of a decision by the Canadian printing giant to pull out of what was supposed to have been a high-growth business: U.S. direct mail.
Investors may have a question or two for president and chief executive officer François Olivier about the sudden exit from what was a promising sector - and after a major effort to shore up the unit when it ran into difficulties.
More pointedly, they may want to know what adjustments are to be made to the corporate strategy to compensate for this retreat now that Montreal-based Transcontinental has agreed to sell its U.S. direct mail operations to IWCO Direct of Minnesota for an undisclosed price.
Transcontinental's U.S. direct mail business was hit hard by the downturn in the U.S. banking sector. About 60 per cent of the company's direct mail customers in the U.S. were financial institutions, and direct marketing efforts were drastically slashed as the recession took hold.
After imposing severe cost-cutting measures and slashing jobs, Transcontinental decided it was best to get out of the business altogether as it wasn't the player best suited to take on the task of leading a much-needed consolidation of the sector.
Several years ago, Transcontinental was betting on strong growth in U.S. direct mail because of "do not call" rules in the U.S. that made it more difficult for companies to do their marketing by telephone.
The U.S. direct mail unit is a small part of the operations of Transcontinental, Canada's largest commercial printer and the sixth biggest in North America. The company says it wants to focus on its core printing and publishing operations in Canada, as well as on its marketing services sector.