After a long run of record financial results, sales at Simon & Schuster fell 13% and operating income dropped 35.5% in the third quarter ended September 30, 2023. Revenue was $307 million, down from $353 million in last year’s third quarter, and earnings fell to $60 million, from $93 million.
CEO Jonathan Karp was realistic about the results, pointing out that after enjoying extraordinary growth, results would eventually come back to earth. He further noted that at the end of the first nine months of 2023, the company’s profit margin of 24.4% was “excellent.” He attributed the decline in the third quarter to sales of Colleen Hoover titles peaking in the third period of 2022. Given that difficult comparison, Karp called results in the most recent quarter “solid,” noting that the company still had a host of bestsellers, ranging from Elon Musk by Walter Isaacson to The Democrat Party Hates America by Mark Levin to Dork Diaries 15 by Rachel Russell.
The release of the third quarter results by S&S’s former parent company, Paramount Global, will be the final financial disclosure released by the publisher following the completion of its acquisition by private equity firm KKR on October 30. Karp said that the transition from Paramount ownership to becoming a private company has gone smoothly, including the process of moving a number of back office operations, which had previously been handled by Paramount, over to S&S.
Karp said that not being part of a media conglomerate for the first time since 1975 was “liberating” for S&S. (It must be noted that KKR’s private equity portfolio has more than 125 companies, with approximately $290 billion in collective annual revenue, but S&S will have more autonomy than it enjoyed with Paramount, and, theoretically, more financial support.) “We are thinking through all the possibilities out there that are available to us,” Karp said. “We look forward to reinvesting our resources into areas where we see growth opportunities.”
Despite the decline in the third quarter, Karp said he is “revved up” about prospects for the holiday season. The quarter, of course, got off to a fast start, with Britney Spears’ The Woman in Me selling more than 1.1 million copies across all formats in the U.S in its first week on sale. The memoir, Karp noted, is also a huge hit in the company’s international markets. Karp called The Woman in Me “a titanic book,” and predicted that it would continue to sell briskly through the holidays.
Among the other books that Karp believes will be big hits over the holidays are the Oprah Winfrey selection Let Us Descend by Jesmyn Ward, Dirty Thirty by Janet Evanovich, and Wildfire by Hannah Grace. Karp was also encouraged by the success of Romney by McKay Coppins, which he thinks could signal renewed interest in political books ahead of the 2024 presidential election.