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Striking HarperCollins First Quarter Profit Loss from $36 M to $3...

The numbers in this report is so shocking to me that I still don’t know if I am reading it right.   

Unrelenting costs pressures combined with a 4.5% decline in sales to drive down first quarter operating profit at HarperCollins to $3 million from $36 million in the last year’s fiscal first period. Revenue fell from $330 million to $315 million. Profits were also hurt by higher returns and a decline in distribution income (HC fulfilled  Harry Potter and the Deathly Hallows  last July).

I’m not sure what HarperCollins will do to make up that enormous operating profit loss.   The article suggested that print runs will tighten a great deal, but I also have to imagine that there will be authors and/or staff cuts.  
Via Publishers Weekly  .  

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

7 Comments

  1. Jia
    Nov 05, 2008 @ 19:38:24

    That is a frighteningly huge drop.

  2. HelenKay Dimon
    Nov 05, 2008 @ 20:42:16

    Wait a second. A $33 million drop? That’s horrifying.

  3. Ann Bruce
    Nov 05, 2008 @ 21:05:45

    Jane – HC didn’t lose money. They made a profit of $3MM. Yr over yr, it doesn’t look favorable.

    Staff cuts don’t always have to be the answer (although it’s always the obvious option). In a depressed economy, a business can also cut costs by *ahem* squeezing its suppliers and the like.

  4. Jane
    Nov 05, 2008 @ 21:10:18

    Ann – Thanks for the clarification. In the article, there is a suggestion by the CEO that prices will be raised but that every item of the P&L looks grim for HC.

  5. Ann Bruce
    Nov 05, 2008 @ 21:50:00

    there is a suggestion by the CEO that prices will be raised but that every item of the P&L looks grim for HC.

    *wince* I’m not familiar with the inner workings of the publishing industry, but, IMHO, raising prices during a depressed economy doesn’t seem like the thing to do when the market isn’t buying your products at the current prices. You’ll have better margins, but your sales volume might take a hit so you could end up with lower revenue overall.

    Books, however, are cheap entertainment and the market might not notice or care about the price increases.

    Or maybe it’s time NY publishers rethink their current business model. There are obvious changes that can make them more profitable.

  6. Anna
    Nov 06, 2008 @ 10:19:12

    Or maybe it’s time NY publishers rethink their current business model. There are obvious changes that can make them more profitable.

    Ann – can you expound on these obvious changes?

  7. Ann Bruce
    Nov 06, 2008 @ 19:00:52

    Anna, as I don’t want to rehash a topic previously discussed on DA, email me (ann at annbruce.net) if you really want to know.

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