NPC: Reduces outlook

National Processing, Inc. (NPC) announced earnings this morning. Importantly, the company provided updated guidance for the fourth quarter based upon their outlook for consumer spending. The company also commented on pricing pressures and competition in the industry.

Chairman and CEO Jon L. Gorney commented, "We are operating in an increasingly challenging business environment given the overall sluggish economy and competitive factors. Several factors have modified our view of the Company's near term outlook. We are experiencing weakness in overall volumes, particularly in the retail segment. In addition, our pricing strategy has been to sell a premium service for a premium price and we have been cautious to match current pricing in the marketplace. We did make an adjustment in the second quarter and have actually signed more deals this year than last, although they have been smaller in terms of volumes and margins. We are still seeing significant price compression as we compete for new national business as well as in retaining our existing base of national customers. Also, due to the seasonality of our business, our revenues and profits for the year are heavily dependent on the fourth quarter due to holiday shopping volume. Based on the weakness that we saw in our business in September and bleak economic forecasts for holiday shopping volumes, we are not optimistic about the chances of a robust holiday season."

On a conference call to discuss earnings, management reported they would be putting even more emphasis on regional (vs. national) merchants.