The Quarto Group issued its second profit update of 2017, stating this morning that despite improved sales in the second half of the year, the publisher’s pre-tax profits will be “significantly lower than board expectations.”
In July, Quarto announced that its profit forecast for 2017 was too high. At the end of the first six-month period of the year, the publisher reported a 13% decline in revenue, compared to the same period in 2016. Meanwhile, its operating loss jumped to $7.6 million, up from $400,000 in the first six months of 2016.
Quarto said that although second half revenue this year will be higher than in the comparable period in 2016, sales for the full year will be “marginally” lower.
Among the causes for the lower earnings, Quarto cited a “tough retail environment,” a change in its financial team (with an ongoing search for a new CFO), and an unsolicited offer to buy the company which caused distractions in day-to-day operations.
Quarto has called 2017 “a transitional year” since noting that the company had divested non-core assets to focus purely on its publishing businesses. Commenting on that change, Quarto chief executive Marcus Leaver said in a statement: “Many aspects of the execution of this strategy went well, some less so.”
Lever said Quarto has two main objectives for 2018—to reduce its debt and to upgrade its adult group to be more in line with the changing buying patterns in the market.
To help cut debt, Quarto said the board will recommend that the company not pay the final dividend of 2017