In reporting third quarter results for the period ended January 31, John Wiley & Sons announced further plans to change its operations and cut costs to accommodate the transition from print to digital. “As discussed last quarter,” said president and CEO Steve Smith in a statement, “due to the market transition away from print to digital and the economic realities facing some of our markets, we have initiated a company-wide restructuring effort that will result in approximately $80 million of run-rate savings going into fiscal year 2015.”
Although the company did not take any specific charges in the most recent quarter, it said it expects to take a $25 million charge in the fiscal fourth quarter and at least one additional charge in fiscal 2014 “related principally to severance and other employee separation-related benefits as well as other business transition-related costs.” Results in the third quarter were mixed with sales rising 5%, to $472 million, but net income falling 9%, to $57.1 million. Revenue growth benefitted from acquisitions—by $23 million-- especially in the education and professional development (former trade/professional) segments, somewhat offset by a $6 million decline in sales from the divestiture of consumer publishing assets. There was no update on the sale of the remaining consumer assets that Wiley is looking to sell or close.
Wiley said it expects the $80 million in cost savings to come from: Strategic sourcing and procurement of third-party-vendor supplied services to reduce complexity and cost of outside services; management delayering of certain business activities through consolidation; offshoring, and potentially outsourcing, of select services to lower cost locations; and overall reduction of business operating complexity. The company said it will provide more information following release of its fourth quarter results in June.
Within the professional development group in the quarter, Wiley said book revenue fell by just less than 1% as a 20% increase in e-book sales was offset by a decline of 4% in print sales. Digital book revenue was $12.9 million in the quarter, while total digital sales accounted for 18% of overall division sales due to higher e-book sales and sales from online assessment (Inscape) and e-learning services.