When HarperCollins reported a 4% drop in sales in the first quarter, few would have believed that would be the publisher's best period for the fiscal year ended June 30. The three subsequent quarters all had sales declines hovering around 20%, and HC finished the year with a 17.8% revenue decline. Although CEO Brian Murray said in a written statement that with a strong fall list, he was looking forward to a new year, there was little sign of a turnaround at HC in the fourth quarter, when sales fell 20.6%. Murray took over HarperCollins in June 2008 after the surprise ouster of Jane Friedman.
The drop in sales, which the company attributed to a weak retail environment, combined with $33 million in impairment charges to result in an operating loss in the year of $16 million, compared to operating income of $160 million, in fiscal 2008. Excluding the one-time charges, adjusted operating income was down 89.4%. In addition to the charges, earnings were negatively affected by customer bankruptcies in the U.S. (Anderson News) and in the U.K.
The impairment charges were mostly associated with the third-quarter reorganization at the company, which resulted in the elimination of what is thought to be about 200 positions. The Collins group was integrated into the general publishing group and the Brenda Bowen children's imprint was closed. Although HarperCollins never discussed whether it planned to reduce the number of titles to be published by the Collins brands, some books have begun to resurface at other houses.
HC also scaled back its Rayo Spanish-language unit and did some restructuring in its U.K. subsidiary.
HarperCollins represented 3.7% of parent company News Corp.'s total revenue in fiscal 2009, compared to 4.2% in 2008.
($ in millions)
|Source: Reed Business Information|
|Adjusted op. income||160.0||17.0||-89.4|