The financial results of the four publicly held book publishers that recently reported on their first quarters all revealed the same pattern: sales were solid until the spread of the coronavirus forced most physical bookstores and schools to close. “Sales were fairly good for the first two months of the year and then dropped off in mid-March,” said Carolyn Reidy, CEO of Simon & Schuster.
Lagardère, the parent company of Hachette Book Group, noted that sales in its worldwide publishing operation were up 5.3% in the first two months of the year compared to 2019 but fell 19% in March, when stay-at-home orders began to go into effect across its markets. For April, Lagardère said it expected global publishing sales to be down 45%.
The quarterly results all had a second thing in common: solid increases for digital products, and not just for the rapidly growing downloadable audiobook market. E-book sales at S&S were up 13% in the quarter and were running 25%–50% over 2019 since the end of the quarter, Reidy said. Not that downloadable audio did badly at the trade publishers: Lagerdère reported that downloadable audio had a “sharp rise” at HBG in the quarter and accounted for 14.4% of the group’s revenue in the period, up from 10% a year ago.
At HarperCollins, total digital sales increased 3% in the quarter and accounted for 23% of its consumer sales (about $91 million), up from 21% in the comparable quarter in fiscal 2019 (HC’s fiscal year ends June 30). Though HC parent company News Corp attributed the increase in digital sales mainly to growth in audiobook sales, News Corp CEO Robert Thomson said e-book sales had seen a “revival” since stores began closing in March.
Both Reidy and News Corp CFO Susan Panucci also spoke about the rise in online sales, particularly when the physical retailers began to close.
A final trait all publishers shared was the inability to forecast how the rest of the year will play out. Lagardère said that given the uncertainty “over the duration and scale of the epidemic and the government lockdowns and closures,” it currently cannot “assess the impacts of the crisis accurately and reliably in terms of the decrease in revenue and operating profit.”
Houghton Mifflin Harcourt, which generated about 80% of its revenue from the education market and the rest from trade in the first quarter, said it expects its second quarter results to be “severely impacted” by Covid-19 but hopes that by the third quarter schools will be “fully operational, either in-person or virtually.”
Reidy said she believes business will improve later in the year, but she was uncertain as to when the improvement will begin. Noting that book sales have held up reasonably well even as some channels have dried up, she was hopeful that, at some point, the book business will make a strong recovery. She added that what she finds “most heartening” about the state of the business at the moment is that “the demand for books is still there” and that “consumers are finding books despite different inconveniences.”
Reidy also praised warehouse workers as “the unsung heros” in publishing’s supply chain. “I am in awe of what they have accomplished,” she said.