A quicker than expected turnaround in its direct response group and additional gains in its trade group put Rodale's book segment solidly in the black in 2002. The direct book unit improved its bottom line by $13 million in the year and recorded a profit for the first time in several years. Sales in the trade group rose by 22%, and profits increased there as well.
Steve Murphy, Rodale CEO, said the key to the improvement in the company's book segment was the ability to turn around the performance of the direct mail group one year ahead of schedule. The restructuring began in fall of 2001 when Rodale cut 148 positions, reduced the number of books published, and slashed the number of mailings. The result, said Murphy, was a much higher response rate and higher sell-through. In 2002, only 200,000 copies of the 3.2 million books ordered by customers were returned, compared to returns of 2.4 million on sales of six million copies in 2001. Murphy said Rodale's ability to better match mailings to a customer's needs was one factor in the improved response rates, but more important was better content. "I've said from the day I got here that better editorial products would be the key to drive the company, and that's what has happened," Murphy said. A final contributing factor in the direct marketing rebound is improved design for both books and mailing pieces.
Despite reducing its direct mail offerings, the direct group is still "four to five times larger" than Rodale's trade group, Murphy said, and accounted for a little more than 30% of Rodale's $450 million in revenue last year. With most other publishers who once operated in the direct mail field abandoning the area, Rodale has found a niche in offering a select number of titles from other operations through its direct marketing machine. The company sold about 800,000 copies of Magic Brands , published by Hyperion, and the first mailing of Workman's Cake Mix Doctor yielded sales of 100,000 and Rodale expects to double that figure by year end. Murphy said he would like to market between five and 10 books from other publishers annually.
While Murphy's focus on the direct mail unit has been to improve profits, the goal of the trade group is to increase sales and earnings. Murphy has brought a host of new editorial and marketing talent to the trade group since he was appointed president in February 2000. Books from the new team "began to come on stream" in 2002, Murphy said. Among the top-sellers last year were Jorge Cruise's 8 Minutes in the Morning, which has nearly 138,000 copies in print, and Dr. Shapiro's Picture Perfect Weight Loss 30 Day Plan, which has more than 155,000 copies in print. Also doing well was Denise Austin's Pilates for Every Body . Murphy credited Rodale's trade distributor, St. Martin's, with doing a solid job in moving books into traditional bookstore accounts and said Rodale's own special sales unit added several new accounts for major titles.
Despite the soft retail market, Murphy is looking for sales to increase 30% in the trade group this year. Title count will rise from 78 in 2002 to 88, and the company continues to expand the types of titles it will publish.
Rodale created a buzz with its acquisition last month of Pete Rose's autobiography, which it will publish next March. Set for this fall is the autobiography of basketball great Oscar Robertson, The BigO , which has a 100,000-copy first printing, plus Chaka: Through the Fire by Chaka Khan and Not Fade Away: A Life Lived with Passion and Joy by Laurence Shames and Peter Barton, which have print runs of 150,000 and 100,000, respectively.