Revenue and profits fell in 2014 at Simon & Schuster, parent company CBS reported. Sales declined 3.8%, to $778 million, while operating profit dropped 5.6%, to $101 million.
The publisher, which saw sales and earnings rise in 2013, closed 2014 on a soft note with sales down 4.4% in the fourth quarter, compared to the final period of 2013, and operating income down 30%.
S&S CEO Carolyn Reidy said 2013 had a number of positive sales surprises--including several Duck Dynasty books and The Great Gatsby--that weren't repeated in 2014. Even though results were down last year, she said the company had a very active 2014, pointing to an array of initiatives and projects "that will march us into the future." Among the new ventures begun last year are new imprints, new vertical marketing initiatives, the expansion of the publisher's e-book library program, and the expansion of the publisher's presence on subscription services, a business model that Reidy said still has her very excited.
One reason for the 2014 decline in revenue and earnings was also a drop in digital sales. E-books accounted for 23.2% of S&S sales last year, down from 24.4% in 2013. Total digital revenue, which includes downloadable audio, generated 26.4% of revenue, down from 27.1% in 2013. Reidy said "it remains to be seen" whether sluggish e-book sales will be reversed, or if the market has found a sort of print/digital balance. In any case, Reidy said, S&S remains format agnostic since the company will sell books to customers "however they want them." She noted that the fourth quarter saw another increase in print book sales, which is something Reidy views as good for the industry.
Sales for the year were down in both the U.S. and international markets. In both areas sales fell in the adult and children's groups, while the audio division remained just about flat. S&S's distribution business was up by 30% last year, and now has 40 clients and more growth is expected this year.
Reidy was hopeful S&S will bounce back in 2015 and pointed to the house's publication schedule as a reason for optimism. Among the titles coming in 2015 are two new Stephen King books; two new Mary Higgins Clark titles; a new David McCullough; books by Joseph Kanon and Jason Matthews that Reidy believes could move those authors to another level; and a new book by Lisa Genova whose Still Alice hit a number of bestsellers lists in late 2014 and early 2015 following the release of the film of the same name.
This year also marks the beginning of the new sales agreement with Amazon. Reidy said she doesn't think the new deal will have any impact on sales of physical books, but acknowledged that with S&S back in control of the pricing of its e-books there could be changes in how e-books sell. But, the CEO acknowledged, it is too early too tell what the impact in this area will be.