For a CEO who saw sales drop 10% and profits fall 45% in the fiscal year ended June 30, 2023, HarperCollins’ Brian Murray sound remarkably calm in an interview with PW looking back over the past 12 months.

“It was a challenging year,” Murray acknowledged. “The numbers don’t paint a rosy picture.” But he said he is heartened by the fact he thinks the worst is over. "I'm feeling better about things," he said. For the fiscal year ended in June, revenue dropped to $2.0 billion from $2.19 in fiscal 2022 and EBITDA (earnings before interest, taxes, depreciation, and amortization) fell to $167 million from $306 million a year ago.

Murray attributed the declines to a number of factors, including macro economic headwinds that he hasn’t seen since the great recession of 2008 as well as the unique conditions tied to the pandemic. The overprinting by publishers and overordering by nearly all accounts to meet the surge in book-buying in the first part of the pandemic created a bubble that began to fizzle last year and it took time for all industry players to recover, Murray said. Results in the third quarter ended this March showed some improvement, but the fourth was a disappointment when profits tumbled 66%. “I thought we could work through things in six months, but it looks like it took a full year,” Murray said, noting that orders from most all accounts were down throughout fiscal 2023 and that the plunge in profits in the fourth quarter was due in part to heavy returns.

Murray said that he believes most accounts are now in a much better position than they were a year ago.

“I think the industry is finding its equilibrium,” he said. He was encouraged that while industry sales are down in 2023 from last year, they are still ahead of 2019. And as the head of a global publisher, Murray observed that while results were off in North America, they were up in the U.K., Spain, Germany, Brazil, and India. “North America had the biggest pandemic bubble and it had the biggest burst,” Murray said.

I think the industry is finding its equilibrium.

Most all parts of HC’s North American business were down in the most recent fiscal year, a reflection of depressed ordering across all channels as accounts worked through the inventory they had on hand, Murray said. A bright spot was the continued strength of audiobooks, which helped to offset declines in e-book sales. Overall, digital sales fell 5% in the year, but their share of total HC revenue rose to 22% up from 21% in fiscal 2022. Murray predicted that at some point in the not-to- distant future, audiobook sales will surpass e-book sales.

To bring down costs, HC implemented a downsizing program early in the year with the goal of cutting its North American workforce by 5%. Among the actions it has taken in the year was closing its Harper Design unit as well as the YA Inkyard Press imprint.

Murray acknowledged that HC was still undergoing a transformation that will likely last the rest of the calendar year. The changes are not only being brought on by changing sales patterns, but by a workforce that is seeing many experienced managers retire (just this week HC announced longtime head of operations Larry Nevins was retiring at the end of the year ). “This is the right time to examine how we do things and find the best way to move forward,” Murray said, noting he expects an “orderly transition to new leadership.”

Though publishing still faces challenges, such as high manufacturing costs that he said he doesn’t expect to come down soon, Murray believes the industry, and HC, are well positioned for the fall. He pointed to the strong start Ann Patchett’s Tom Lake had in its first week on sale, when it sold about 38,000 copies at outlets that report to Circana BookScan, a figure Murray said was much higher than her previous book He also expects novels that were selling well at the end of the fiscal year, such Barbara Kingsolver’s Demon Copperhead and Shelby Van Pelt’s Remarkably Bright Creatures, to continue to be popular for the remainder of 2023.

“Fiction will be the story for the rest of the year,” he said.