Reader’s Digest had another disappointing quarter with sales down 26% in the third period ended September 30, to $230.1 million, while posting an operating loss of $100.1 million, a figure that includes an impairment charge of $85 million. Excluding charges in both the third quarter of 2011 and 2012, the loss fell from $25.9 million to $15.1 million.
The revenue declines were primarily due to a lower active customer base on RD’s books and home entertainment products and a reduction in promotional investment across many of its markets in Europe and Asia. Revenue declines were also due to lower sales on some of RD’s book product lines in North America, the sale of the Every Day with Rachael Ray publication in October 2011 and declining subscription renewals on certain magazine titles.
The company said that despite “positive developments taking place in our business as a result of our transformational efforts, certain aspects of our legacy businesses continue to underperform and to offset these positive trends. In particular, parts of our business within our Europe segment and our books and home entertainment business within our North America segment are less profitable than anticipated.”
"That said," RD president Robert Guth said, “we remain very committed to our plan to holistically transform the Company. This quarter we made real progress on all elements of this transformation, particularly in our initiative to license our international businesses. We also continued to make steady strides in our strategy to realign our corporate structure to better fit our business, and proceeded to take necessary steps to help change the trajectory in our North America business."