With Weak First Half, RH has “Much Catching Up to Do”
by Jim Milliot -- Publishers Weekly, 8/28/2008 7:09:00 AM
New Random House CEO Markus Dohle appears to have his work cut out for him, as parent company Bertelsmann reported this morning that sales for its publishing group fell 8% in the first half of 2008, to 766 million euros ($1.13 billion), and EBIT (earnings before interest and taxes tumbled 29.5%, to 31 million euros ($46 million). In an letter to all worldwide employees, which are also Dohle’s first public comments since taking over as CEO June 1, Dohle didn’t mince words about the situation RH finds itself in. “We have much catching up to do from September through December to reach our ambitious targets,” Dohle wrote.
In explaining the first half results, Dohle said RH was “hit hard” by the weak U.S. dollar and British pound as well as a declining worldwide economy that has curtailed consumer spending. In North America sales were flat, and Dohle said the company faced higher publishing and operational costs for freight and paper. Sales in the period were led by The Appeal and Audition as well as two Barack Obama titles, Dreams from My Father and The Audacity of Hope. Sales for e-books are already more than double the total for all of 2007, although Dohle acknowledged they still represent only a tiny source of revenue.
Reviewing RH’s other worldwide operations, Dohle said Random House Group UK outperformed the marketplace, and added that the group will role out its e-publishing program next month in connection with the debut there of the Sony Reader. Sales at the Spanish-language company, Random House Mondadori, were up significantly. In Germany, paperback sales were up, while in Asia profits rose at Random House Korea, but results were down in the Japanese unit, Random House Kodansha.
Dohle told employees sales were off to an encouraging start in the second half of 2008, with revenue up in July in the U.S. and Germany. Still, Dohle noted, “even for our biggest books, in this retail environment, there are no guaranteed successes. We will have to work harder for every sale.”Click here for the complete text of Dohle's letter.
