Book publisher Simon & Schuster (CBS) did not have the greatest of first quarters, according to the report it released late Wednesday afternoon. Total sales for the period ending March 31 fell 10% to $151.7 million, though adjusted operating income before depreciation and amortization (OIBDA) climbed to $3.6 million -- much better than last year's virtually flat earnings, and hampered by a $1.5 million restructuring charge S&S took as a result of various reorganizations within the company.
Operating income fared better as well, up to $2 million compared to a loss of $2.1 million 12 months ago. Still, CBS blamed the publisher's overall sales decline on "the continued soft retail market," while S&S CEO Carolyn Reidy attributed the lackluster quarter to a still-anemic economy and a weaker list of titles compared to 2009's first quarter.
But the brightest spot came from the digital side, as e-book and audio download sales hit $12 million -- a staggering $8.4 million increase from the first quarter of 2009, and a figure that represents 8% of total company revenue. CEO Carolyn Reidy told Publishers Weekly she expects digital sales to represent 10% of S&S sales by the end of year, a projection made possible because of the iPad (which didn't launch until the start of the second quarter). The company had held back the release of e-books for many of its biggest titles released in the first 3 months of 2010.
S&S wasn't the only publishing house to sing the hosannas about increased digital book sales. Romance publisher Harlequin (TS.B) broke out some specific figures during its earnings call Wednesday, and even though overall sales number suffered because of the strengthened Canadian dollar, its digital sales are very much on the rise. According to Harlequin CEO Donna Hayes, first-quarter revenue from digital sales worldwide was $6.9 million, representing 6.1% of the company's total revenue and up 61% from last year.
Once second-quarter figures start rolling in over the summer, look for those eye-popping digital sales numbers to grow even more -- even if this projected result likely offsets further erosion of total book sales across the board.
Managing your Portfolio
Keeping your portfolio and financial life fit!View Course »