AMS Sales Sag in March, Blossom in April

By John Mutter, PW Daily For Booksellers -- Publishers Weekly, 5/13/2003

"Exceptionally" high returns and other costs have forced Advanced Marketing Services to increase estimates of its loss in the fourth quarter, ended March 31, to a range of 20-24 cents a share compared to analysts' estimates of five cents a share. For the year, the company's profit will be between 56 and 60 cents a share, down from 84 cents.

The difficulties parallel those reported this spring by major book retailers and others whose business was hurt by the war against Iraq.

AMS president and CEO Michael M. Nicita blamed the returns on "the continued soft sales environment, with the last two weeks in March marked by substantial double-digit declines, and from significant customer inventory reductions," all of which leads to higher costs, particularly for labor, freight and markdown expense. The company's Publishers Group West subsidiary also had "substantially higher" returns.

The other part of the loss stems from costs associated with the termination of AMS's business with Safeway in the U.K. and "the timing of certain advertising and promotional projects." Earlier in the fiscal year, AMS had higher costs related to the installation of new computer systems.

In positive news, Nicita said that processing costs have continued to drop and that April "has shown improvement in comparable sales at most of our major customers, a reversal of the soft register sales that we had been experiencing."

Operating in North America, the U.K., Australia and Singapore, AMS is best known as the main book wholesaler for warehouse clubs. It is also a distributor and offers custom publishing services. Bookstores are among its customers.

This article originally appeared in the May 13, 2003 issue of PW Daily for Booksellers. For more information about PW Daily, including a sample and subscription information, click here.