First quarter sales at Simon & Schuster fell 6.2%, to $151.7 million, as softness at retail from still cautious consumers drove down sales of print books. Somewhat offsetting the decline in print was an $8.4 million increase in e-book and audio download sales, to $12 million, a figure that represents nearly 8% of total revenue. CEO Carolyn Reidy said she expects digital sales to represent 10% of S&S sales by the end of year.

Despite the sales decline, S&S posted operating income of $2.0 in the quarter compared to a loss of $2.1 million in last year’s first period. Earnings exclude $1.5 million in charges associated with the previously announced restructuring of the S&S sales force and S&S Australia.

In addition to the slow economy, Reidy attributed the sales decline to a weaker list than last year’s first quarter. Adult hardcover and children’s illustrated titles were particularly soft, but sales of trade paperbacks were up led by Little Bee, Forgotten Garden and Brooklyn. “There definitely is still some price resistance,” Reidy said. While e-books are cheaper than hardcovers, Reidy doesn’t believe that was a major factor in the lower sales. She said S&S is still experimenting with how best to price e-books, but has already learned one major lesson: “e-books don’t all have to be priced at $9.99 to sell in very strong numbers.” There is no doubt, Reidy said, that some consumers are buying frontlist titles as e-books instead of print books, a few consumers are buying both and that some e-books are being bought by readers who would never have bought a print book. She also believes that many backlist titles bought as e-books are incremental sales “because of ease of access.”

Another bright spot for S&S was international where sales were up 13%, with solid gains in the U.K. and Australia.

Reidy said she is “heartened” by what she believes is a firming up of business within the last four to six weeks. With a stronger list set for the balance of the year and a hot new bestseller, Women Food and God that has 850,000 copies in print, Reidy is optimistic results will improve later this year.