Slowing growth in digital sales contributed to a 7.2% decline in sales at Harlequin in 2012, to C$426.5 million, while operating earnings fell 11.6%, to C$72.8 million, parent company Torstar reported Wednesday morning. Both figures reflect the negative impact of foreign currency translations. While digital growth slowed, Torstar said that declines in print sales also began to slow in the second quarter of the year in North America, a “trend that continued for the balance of the year.”
At the close of 2012, global digital revenue represented 20.7% of sales (C$88 million), compared to 15.5% (C$71 million) in 2011.
In North America, revenue was down C$22.1 million with declines of C$19.1 million in retail print and C$6.9 million in direct-to-consumer revenue, which more than offset digital revenue growth of C$3.9 million. In addition to slowing digital sales, Torstar also pointed to the success of the Fifty Shades trilogy as having “a negative impact on market share.”
The overseas division continued to be negatively impacted by economic conditions in Europe, Torstar said, with revenue down C$5.3 million as retail print and direct-to-consumer revenue declines affected digital revenue growth.
The decline in earnings was attributed to revenue decline and higher author royalties on digital sales, partially offset by lower promotional spending and overhead costs, Torstar said. The company recorded restructuring and other charges of C$1.3 million at Harlequin in a move that eliminated nine positions. Torstar expects annual cost savings of C$900,000.
Looking at 2013, Torstar said it expects to see more stability in the year in North America for Harlequin as digital growth continues to moderate along with print declines. Overseas markets are expected to remain more challenging, especially in Europe, resulting in relatively flat earnings for the year.