Harlequin Bounces Back; CSEP Sale Near

Following a disappointing 1999, results at Harlequin rebounded in 2000 with operating income increasing 16% to C$102.3 million ($66.5 million), while revenues inched up 0.4% to C$579.2 million ($376.5 million). According to parent company Torstar Corp., the improvement at Harlequin was largely driven by the North American market, where retail revenues increased by C$12 million and unit sales were up 7%. Direct marketing revenues were up by C$2 million, although unit volume was down. Single-title releases generated approximately 40% of Harlequin's North American retail sales. In addition to North America, the Japanese market showed marked improvement last year, although results in the U.K., Poland and Australia fell.

During the year, Torstar made the creativity division part of Harlequin, and the operating unit added C$50 million to sales while reporting a C$2 million loss. The creativity division added the Learning Adventures book club for ages one to six as well as Curiosity Kits in the year, and Torstar executives said they are looking for steady gains at the division over the next several years.

Torstar's overall earnings were hurt by a C$47.6-million loss from discontinued operations that was primarily due to its Children's Supplementary Education Publishing segment, which the company is in the process of selling. Executives said final bids were submitted in early March and the company hopes to close the sale in late March or early April. Also during the year, Torstar closed down Harlequin's newsletter operation.

Executives said they expect Harlequin to have a very good year in 2001, observing that the publisher should not be affected by the slowing economy.