Nov 5 2008
Striking HarperCollins First Quarter Profit Loss from $36 M to $3 M
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 .
Send to Kindle
Nov 05, 2008 @ 19:38:24
That is a frighteningly huge drop.
Nov 05, 2008 @ 20:42:16
Wait a second. A $33 million drop? That’s horrifying.
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.
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.
Nov 05, 2008 @ 21:50:00
*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.
Nov 06, 2008 @ 10:19:12
Ann – can you expound on these obvious changes?
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.