PW: Reader's Digest Recovery Continues

Cost reductions in the U.S. and revenue increases in international markets helped boost operating profits 73% to $46.7 million for the third quarter ended March 31, 2000, in Reader's Digest's global books and home entertainment group. Revenues in the group increased 7.2% to $401.3 million. According to RD, overhead costs were reduced in the U.S. in the quarter, while revenues grew at better than a 10% rate, aided by the purchase of Books Are Fun. Double-digit revenue increases were also posted in Australia, Brazil, France, Mexico, Norway, Poland, Spain and Sweden, led by improved performances for Select Editions, general books and music products. For the nine-month period, the global books and home entertainment group had a 111% increase in operating profit to $173.9 million, while sales were flat at $1.20 billion.

Total company sales rose 2.5% to $620.4 million in the quarter, the second consecutive quarter that RD posted a gain in sales. Thomas O. Ryder, RD chairman, observed that "revenue growth is now strengthening, including in the core books and magazine businesses, and we believe that fourth-quarter revenues may hit double-digit growth. This would mean the first full year of revenue growth for the company since 1996."