PW: Warehouse Clubs Dominate AMS Sales

Despite Advanced Marketing Services' ongoing efforts to diversify its operations, warehouse clubs continued to account for the overwhelming portion of revenues for AMS in the fiscal year ended March 31, 2000, representing 89% ($559 million) of the company's $628 million in sales last year (News, May 22). In fiscal 1999 warehouse clubs represented 86% of revenues. Sam's Club was AMS's single largest customer, accounting for 41% ($257.5 million) of revenues, while Costco represented 40% ($251 million). AMS's other major customers include office product superstores, computer and electronic superstores, and drugstores. AMS is also now filling orders for e-retailers and in fiscal 2000 began to supply product to Borders. During the last year, AMS began to develop digital delivery capabilities.

According to its year-end filing with the Securities and Exchange Commission, AMS's 25% sales increase last year was led by a 26% gain in revenues to $586.1 million in its U.S. operations. Revenues in its international division rose 16.7% to $41.8 million and accounted for 6.6% of total revenues compared to 7.1% in fiscal 1999. Revenues in the U.K. increased 13% to $37.7 million, while sales in Mexico jumped 64% to $4.1 million, and AMS reported that its Mexican subsidiary had an operating profit last year for the first time in its history.

International revenues do not include results from Bookwise International, an Australian book distributor that had sales of $4.1 million in fiscal 1999 and which AMS bought for $2 million in late March. AMS's 25% stake in the Canadian wholesaler and publisher Raincoast Book Distribution resulted in a $335,000 contribution to AMS's earnings in fiscal 2000. AMS paid $900,000 to acquire its interest in Raincoast. AMS said it will continue to expand its international operations through internal growth and acquisitions.

In fiscal 2000, AMS bought books from 317 publishers, with Random House its largest supplier and representing 23% of total purchases. Penguin Putnam accounted for 18% of purchases and Simon & Schuster 10%.