Led by solid gains in its two biggest markets—the U.S. and U.K.--Penguin Group reported total revenue of 1.05 billion pounds ($1.71 billion) in 2010, a 6% sales increase with operating profits up 26% to 106 million pounds ($172 million). The profit gains include provisions taken for write-offs for Borders as well as for other international retailers. Penguin CEO John Makinson said Penguin believes the provision it took for Borders in 2010 should be sufficient to cover any losses and that Penguin’s focus in 2011 regarding Borders will be on its top line impact and not the balance sheet. Earnings in 2010 worldwide benefited from improvements in DK and the U.K., where Penguin had taken write-downs in 2009. Both sales and earnings were at record levels for Penguin. "We had a fabulous year," said Makinson.
In the U.S., strong gains were reported in the young adult group and in international sales, while digital sales tripled and represented about 8% of Penguin USA’s total revenue. Worldwide, e-book sales accounted for 6% of sales and sales rose “six fold” in the U.K., Makinson said. Back in the U.S., Nora Roberts and Charlaine Harris each of sold more than 1 million e-books. Despite the rapid growth of e-book sales and the problems of the bookstore chains, Penguin Group (USA) CEO David Shanks noted there remains strong demand for print books and that there are still lots of outlets that sell print titles.
Penguin’s imprint strategy has helped it breakout new authors in 2010 even as it continues to sell large quantities of books from established writers. Penguin published 34 authors who hit the New York bestsellers lists for the first time last year. The company's backlist also performed well in the year. Among its core imprints, G.P. Putnam's had 38 bestsellers and Viking 14 while 35% of Penguin Press's titles hin the list. The house also had 83 mass market paperback bestsellers.
Makinson acknowledged that forecasting how the global trade book market will perform in 2011 is difficult, given the changing distribution systems in all markets. "It's really, really difficult to read," he said. Makinson is hopeful that much of the business lost at Borders will be picked up by other retailers and that demand for e-books will continue to boost growth. With Penguin's resources and depth of content, Makinson said he is confident the house will outperform the trade market this year.
