Recent financial results from Hachette Book Group, HarperCollins, and Simon & Schuster showed three of the Big Five publishers struggling through the first nine months of 2023, as the industry coped with sluggish sales and rising costs. While sales were down only slightly in the period, earnings dropped at a faster rate, but executives were hoping for a strong finish for the year.
HC and S&S had results through September that were polar opposites of each other. After sales at HC fell 6.5% and earnings declined 32% in the first half of 2023, compared to the same period last year, profits soared 67% in the third quarter, rising to $65 million on an 8% sales increase, to $525 million. The huge quarter markedly improved HC’s financial performance for the year to date.
On the other hand, S&S saw third-quarter sales fall 13% and operating income drop 35.5% compared to 2022, after posting solid increases in the first six months. The third-quarter decline resulted in a sales dip of 0.7% through the first nine months of 2023 at S&S, with earnings falling 6.3%.
The improvement at HC, whose results were released late Thursday, was led by higher physical book sales, a particularly good performance at HarperCollins Christian Publishing, and a return to a more normal ordering pattern from Amazon, following last summer’s resetting of its inventory levels. “The script was completely rewritten in the first quarter of our publishing business,” which ended September 30, said Robert Thomson, CEO of HC parent company News Corp.
Digital sales increased 3% in the first quarter of fiscal 2024, led by digital audiobooks, which accounted for 45% of digital revenue, and the company expects sales of the format to continue to grow. Thomson was extremely bullish on Spotify’s U.S. digital audiobook launch, which was announced last week, declaring that he’s “genuinely confident” Spotify’s entrance into the market will bring benefits to authors and readers.
News CFO Susan Panuccio said that while the company expects HC’s sales and earnings to increase in fiscal 2024 compared to the prior year, they will not grow at the rate achieved in the first quarter. Still, she said, News sees HC’s EBITDA margin returning to double digits in the year after dropping to 8.3% in fiscal 2022.
S&S CEO Jonathan Karp said despite the third-quarter decline, he is “revved up” about prospects for the holiday season. In addition to expecting Britney Spears’s The Woman in Me to continue to sell briskly, he predicted Let Us Descend by Jesmyn Ward, Dirty Thirty by Janet Evanovich, and Wildfire by Hannah Grace will also have strong fourth-quarter sales.
Revenue for HBG parent company Lagardère Publishing inched up 0.9% in the first nine months of 2023, compared to the same period last year. The modest increase includes a 1.6% sales decline in the third quarter, to €767 million.
At HBG, third-quarter sales fell 5.2% due to tough comparisons to 2022 and overall softer industry sales, Lagardère said. HBG CEO Michael Pietsch said bright spots in the third quarter included sales of backlist, audiobooks, SF and fantasy, children’s, and travel. He is hoping for an improvement in the final quarter, driven by new titles from such authors as David Baldacci, Michael Connelly, Patricia Cornwell, James Patterson, and Kerry Washington.