Sales in Houghton Mifflin Harcourt’s trade division fell 7.3% in the first quarter ended March 31, 2016 compared to the first period of 2015. Revenue dropped to $31.5 million from $33.8 million in last year’s first quarter. The division posted an EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $3.7 million in the quarter, up from a loss of $1.4 million a year earlier.
HMH blamed the sales decline on lower e-book sales as well as a drop in e-book subscription revenue. The decline in e-book sales was attributed to fewer movie tie-ins. Sales of cookbooks were up in the quarter, led by The Whole 30 and The Weight Watchers Family Meals.
The increase in sales of cookbooks was one factor in raising the cost of sales in the quarter, with HMH noting in its quarterly filing with the SEC said that print cookbooks are more costly to produce than e-books. Other reasons for the bigger loss in the quarter—in addition to lower revenue—was higher promotion and advertising expenses and higher salary-related costs.
Revenue in HMH’s education group rose almost 35%, to $174.3 million, in the quarter. The EBITDA loss was cut to $24.0 million from $37.3 million in last year’s first quarter. The gain reflects the May 2015 purchase of Scholastic’s educational technology unit. HMH said it is making progress integrating the former Scholastic group with the product development and sales teams “largely integrated” and it expects the integration of its backoffice system to be completed by the end of the second quarter.