Industry Stocks Fell 6% in 2002

The stock prices of 12 of the 21 companies on the Publishers Weekly Stock Index fell in the year, resulting in a 6.8% decline in the PWSI in 2002, a performance that was still better than the 16.8% decline posted by the Dow Jones Industrial Average in the year.

Retailers had the most difficult time in 2002—stock prices of all three major chains dropped in the year, led by Barnes & Noble, whose 38.9% price drop was the largest of all the companies on the PWSI. The chain's stock, which had a 52-week high of $35, was hurt by its December announcement that fourth-quarter results would be weaker than expected. The only retailer to post an increase in its stock price, Hastings Entertainment, had a mixed year; while its stock price finished up 14.2%, at $4.91, soft second-half results pulled its price down from its high in 2002 of $9.20. The stock prices of the nation's two major online booksellers took opposite directions last year. Amazon.com's stock price, boosted by higher than expected sales, rose 74.6%, while Barnes & Noble.com's stock price fell 25.3%, to close at $1.15. B&N.com's stock, which had a 52-week low of 43 cents, benefited from substantial buying of its shares by its parent companies, Barnes & Noble and Bertelsmann.

Despite posting the largest increase in the year, MediaBay's stock had a volatile 2002, reaching as high as $6.20 before falling back to $1.20 at the end of the year. Courier Corp. had the largest dollar increase in its stock price among the companies on the PWSI, finishing the year at $45.84, a 31% gain. Investors appear encouraged by the relative stability in its printing segment and the strong growth in its publishing division. Weak results dropped Donnelley's stock price by 26.7% in the year, although the third printer on the PWSI, Banta Corp., managed a 5.9% increase in its stock price.

Other noteworthy performances include the 48.2% jump in the stock price of Educational Development Corp., which continues to enjoy strong gains in its home sales division. Scholastic's stock took the largest dollar decline, falling by more than $14; it recently announced that its earnings per share in fiscal 2003 would be flat with fiscal 2002 (see p. 14). The slow financial turnaround at Reader's Digest dragged the publisher's stock price down by 34.6% in 2002, and its stock price has fallen by 61% in the last two years.