In a move one analyst says might be tied to poor results following a change in company sales strategy, Heartland Payment Systems Inc. has reassigned its chief sales officer to a regional director position, the Princeton, N.J.-based payment processor announced Friday in an 8-K report filed with the Securities and Exchange Commission.
Heartland did not say in the filing why it reassigned Sanford C. Brown, who was named chief sales officer in 2006 and has worked at Heartland since the company’s founding in 1997. Company officials did not respond to a PaymentsSource request for an explanation
However, the move may be because of “ongoing weakness in sales metrics,” says David J. Koning, a senior research analyst at Milwaukee-based Robert W. Baird & Co. In a research note, Koning says that the “gross margin installed,” which measures the 12-month profitability of new merchants each quarter, has fallen by “double digits for five quarters, and we believe Brown’s resignation is an indication that management is focused on improving this metric.”
In its second-quarter earnings report, Heartland said it had $12.1 million in new margin installed, a 20.4% decrease from $15.2 million during the same period last year (
Heartland has been banking on a new sales structure to gain more merchants. Until late last year, a Heartland sales representative could sell just about any Heartland product or service. Now Heartland’s salespeople sell to specific vertical markets, such as health care or campus products.
Koning does not consider the move as indicative that Heartland’s sales reorganization is falling short. “While this is reasonable, we think the sales force reorganizations is going well. Our checks have not told us otherwise.”
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