Total book sales at Reader's Digest fell 8.9% to $937.3 million in the fiscal year ended June 30, 1999, according to the company's 10-K filing with the Securities & Exchange Commission. All three segments had a decline in the year, with the series books category reporting the largest drop at 11.9%. Sales in RD's biggest book unit, general books, fell 10.8%. The smallest decline was recorded by the series editions segment (formerly known as condensed books), where sales fell 2.4%. Earlier this year, RD reported that sales in the book and home entertainment group, which includes its video and music segments, fell 8% to $1.54 billion, although operating profits rose 62% to $80.8 million (News, Aug. 30).
The decline in book sales was attributed in part to RD's decision to severely reduce its adult and children's book retail operations as well as to eliminate its nonfiction book series.
General book sales were down in the U.S. due to reduced promotional mailings to marginal customers, which offset higher general book revenues in France. Sales of RD's condensed book line were up in Brazil.
Despite the revenue decline in the books and entertainment group, lower promotional and overhead costs improved profitability in the U.S., Germany (where profits jumped 158%) and the U.K., offsetting operating losses in Russia where the economic crisis led RD to cease most bulk mailing activity.
Looking ahead to fiscal 2000, company chairman Thomas O. Ryder said in RD's annual report that the publisher will be "going online, big time." RD plans to invest about $100 million in Web initiatives in the current year.
Elsewhere at RD, the publisher reported that the company exchanged eight million shares of Class A nonvoting stock for 9.3 million shares of Class B voting stock held by the DeWitt Wallace and Lila Wallace“Reader's Digest Funds. The exchange was made to prevent the funds from having to pay excise taxes (which they would have had to do beginning in 2000 if the funds had still controlled more than 50% of the voting stock); following the exchange, the funds own about 50% of the Class B stock and retain control of RD.