Simon & Schuster once again showed the ability to raise quarterly profits despite a decline in sales, posting an 8.6% increase in operating income in the second period of 2015 over the same period in 2014 while revenue fell 5.6%, to $199 million. In the first quarter of 2015, sales fell 5%, but profits rose by $1 million.
The second-quarter decline in revenue was more than offset by lower production and distribution costs and digital revenue accounted for 24% of S&S’s total revenue in the quarter, S&S CEO Carolyn Reidy said sales of digital audio remained particularly strong in the second period, helping to offset a modest decline in e-book sales. Overall comparisons with last year's second quarter were negatively impacted by the shipment of Hillary Clinton's Hard Choices, Reidy observed. In addition to strong sales of digital audio, another bright spot has been the success of books from You-Tube personalities. S&S has books from You-Tubers in three of its imprints--Atria (which has the Keywords imprint), Touchstone and Gallery which has had a hit with Selp-Helf by Miranda Sings.
S&S's top-selling titles in the period came from long-time stars David McCullough (The Wright Brothers) and Stephen King (Finders Keepers). All the Light We Cannot See by Anthony Doerr also continued to sell well in the quarter. Reidy also remains bullish on subscription services, noting that 75% of the 15,000 backlist titles that are part of the services have been read. "I think that shows when you eliminate price as a consideration, people are willing to experiment," Reidy said.
For the first half of 2015, revenue was down 5.6%, to $344 million, but operating income was up 8.8%, to $37 million. Reidy said she is hopeful that S&S will still finish 2015 with a modest revenue gain.