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Once again, Viking achieved record revenues and record net income for its full fiscal year 1997. Revenues grew 21.8% to nearly $1.3 billion, and net income increased 16% to $70.1 million. Our business outside the United States is now more than 63% of our total revenue, and growing.
NO, IT'S NOT EASY
Growing profitably in today's intensely competitive and global office products market is certainly not easy. Fiscal 1997 presented challenges to Viking in several countries. In the U.S. and almost everywhere else, paper prices were lower by as much as 34%, slowing our overall revenue growth. In France, countrywide strikes and social issues prior to their recent elections negatively affected our business during the first, second and third quarters. However, we resumed strong top-line growth in the fourth quarter. In the United Kingdom, our own capacity constraints led to slower growth in the year's second half. Now, the opening of our third distribution center at Manchester has alleviated the issue. All in all, by focusing on core issues, strengthening our catalogs, facilities, systems and people, we are set to achieve continued profitable growth.
1997 ACCOMPLISHMENTS
Fiscal year 1997 had many significant accomplishments:
Even more importantly, our average annual revenue per customer increased nearly 5% and our customer retention, year over year, rose to its highest level ever. All growth has been achieved without acquisition or debt.German revenue of $138 million. Austria, in only 6 months, had revenue of $4 million. New distribution centers opened in Denver, Colorado and Munich, Germany. New call centers opened in London, England and Dublin, Ireland. Major investments in new communication networks, systems and computer capabilities. Prepared to open Italy and began research on Japan.
1998 AND BEYOND
We are planning for strong, healthy growth. Our third U.K. distribution center at Manchester opened in August 1997; we will open Italy in early calendar 1998; all corporate functions and Western U.S. Call Centers will consolidate in our new World Headquarters in Los Angeles this fall 1997; and our new ÒbreakthroughÓ digital one-on-one catalogs will have the potential to get results never before possible. Our future is exciting and limited only by our own ability to create and successfully execute.
Sincerely, | ||
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IRWIN HELFORD Chairman & Chief Executive Officer |
BRUCE NELSON President & Chief Operating Officer |
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Viking Office Products, Inc. sells office products to small and medium sized businesses through direct marketing catalogs. Viking offers a wide selection of office products at prices discounted from 25% to 69% below manufacturers' list prices. The company's primary business is the sale of general office supplies, which accounts for 75% of revenues. Computer supplies account for 15% and office furniture accounts for 10%.
The company believes that direct marketing is the most convenient and cost-effective way for small and medium sized businesses to purchase office products. Viking seeks to distinguish itself from other direct marketers and office products superstores by providing exceptional customer service, convenience, promptness and an economical way to purchase a complete selection of office products. The company's direct marketing mailings consist of carefully planned catalogs. Viking uses its proprietary computer system to analyze the results of its mailings and to target future mailings to increase effectiveness and lower marketing costs.
The company seeks to make shopping from its catalogs as easy as possible. Viking makes local order entry and customer service representatives available to its customers. In addition, the company provides free delivery of orders over $25, a one-year guarantee, a 30-day free trial on all products, free pickup of all returns and a 30-day open account billing. More than 97% of the company's orders are shipped the same day they are received and nearly all are received by the customer within one or two business days.
Viking offers a comprehensive selection of over 10,000 office products. The company uses a proprietary information system to continually evaluate its merchandise offerings. The firm uses this information to update its product selection to better meet the needs of customers.
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