With all three of its major operating groups reporting higher sales, total revenue at Houghton Mifflin rose 2.2%, to $570.4 million, in the third quarter ended September 30, although net income dropped to $95.8 million from $103.7 million. HM CEO Tony Lucki said that with less than two months left in the year, he was "confident" HM would hit its financial targets. The company is expecting moderate declines in sales and earnings for the year. For the first nine months of 2004, sales were down 0.8%, to $1.04 billion, and the net loss was cut to $3.1 million, from $8.9 million.
Lucki said HM has approached 2004 as an "investment year" that will position the company to take advantage of increased adoption opportunities in the 2005—2009 period. Among the subjects HM has developed new products for are elementary reading, language arts and literature plus secondary math and social studies.
Sales in HM's k—12 segment rose 1.8% in the quarter, to $397.2 million. Helping to offset a decline in adoption sales was a 19% increase in sales to open territories. The school division had strong sales of its basal reading programs and Houghton Mifflin Leveled Readers, while math, language arts and social studies had solid sales gains in the secondary school market.
The college segment posted a 0.8% sales increase in the quarter, to $116.1 million. Lucki said the college market is "challenging," citing such issues as pricing perceptions, used textbook sales and Internet availability of textbooks and supplements. HM's college unit was also hurt by lower backlist sales. Despite the problems, Lucki said the college division will be a "valuable contributor" to HM in 2004 and beyond.
The trade and reference group had a strong quarter with sales ahead 8.2%, to $41.1 million. The Plot Against America helped to drive sales in the adult segment, while The Gourmet Cookbook contributed to higher cookbook sales. Books related to The Polar Express have been selling well, and Lucki said he expects that trend to continue throughout the holidays.