Investors appear to be more bullish than many industry members about the prospects for book publishing, as the Publishers Weekly Stock Index rose 10.3% in 2001, compared to a 7.1% decline for the Dow Jones Industrial Average. Fifteen companies on the PWSI posted increases in their stock price in the year, while prices fell at five companies. Two companies--Houghton Mifflin and Hungry Minds--were removed from the index in the year following their acquisitions by Vivendi and John Wiley & Sons, respectively.
As a group, retailers performed the best in the year, although several companies' stock prices remained at low levels. The largest gain in the year was at Hastings Entertainment, whose share price jumped 198.6%, to $4.30. The multimedia retailer's stock price had been as high as $8.31 in the year, as the company beat expectations in the middle of 2001, but the price fell back after the third-quarter loss was higher than projected. Books-A-Million had the second largest increase, with its stock price moving up 119.6%, to $3.03. The various initiatives by Borders Group to cut costs were rewarded by investors who pushed up the chain's stock by more than $8 in the year.
Educational Development Corp., whose sales have benefited from the expansion of its home division, saw its stock price rise 83.3%, to $5.50. Steady growth in its book manufacturing operation along with large gains in its Dover Publications unit drove Courier Corp.'s stock price up 76.5% in the year, and the company had a three-for-two stock split. Advanced Marketing Services also had a three-for-two split in the year. Thomas Nelson's stock price gained 58.6%, due in part to the sale of its money-losing gift division and higher sales of religion and spiritual books after September 11.
In the new media field, Barnes&Noble.com's shares rose 23 cents, 17.6%, to close at $1.54. Amazon.com 's stock price fell 30.5% in 2001 to finish at $10.82. Despite signs of strong December sales, Amazon has not convinced all investors about its ability to become profitable. Investors were also not impressed with the prospects for MediaBay and Franklin Electronic Publishers, whose stock prices fell 62% and 70%, respectively, the largest declines by companies on the PWSI. Disappointing North American book sales as well as a weak advertising environment hurt results at Reader's Digest, contributing to a 41% drop in its stock price. Soft advertising also had a negative impact at Pearson, whose stock price fell 47.9%. Profits in its educational business will come in below budget in 2001.
Industry Stocks: 2001 Performance
|Educational Development Corp.||3.00||5.50||83.3|
|Advanced Marketing Services1||17.38||18.25||57.6|
|Barnes & Noble||26.50||29.60||11.7|
|Franklin Electronic Publishers||4.63||1.40||-70.0|
|Dow Jones Average||10,786.85||10,021.50||-7.1|
|1Company had stock split in year. Totals for 2001 reflect pre-split prices. Based on final closing price, the PWSI was 372.33. |