RD Book Group Off To Strong Start
Jim Milliot -- 11/6/00

Total revenues for the first quarter ended September 30, 2000, rose 7.8% to $559.7 million at Reader's Digest, the biggest quarter of revenue growth since 1995, company chairman Thomas O. Ryder told analysts in a conference call discussing the company's performance. The revenue gain was led by the global books and home entertainment (BHE) group where sales increased 12.1% to $358.3 million and operating profits jumped 32.7% to $54.1 million

RD attributed the sales increase in its BHE group to the addition of Books Are Fun in the U.S. and strong growth in Germany, Mexico, Brazil, France and Australia. Higher sales of series products, particularly of Select Edition, also contributed to the sales gain. Ryder said the "surge in profits" in the group came from all product lines, and noted that "the turnaround in the U.S. is here now." Heading the profit growth were the series and general books line as well as music. Books Are Fun had a small seasonal loss, but Ryder said he is expecting a strong second quarter from the unit.

Ryder said that with the success of its recently released How to Do Anything on a Computer, RD is creating a new line of books on computers and the Internet. Ryder is also bullish on the prospects for series books in the year and said the company will launch its "micropublishing" program, in which the company will soon publish titles with print runs of 50,000 to 100,000.

Book Sales Fell in '00
Earlier this year, RD reported that operating profit in the BHE group jumped 149%, to $209.8 million, on a 3% sales gain to $1.56 billion for the fiscal year ended June 30, 2000 (News, Aug. 28).

According to the company's 10-k filing with the Securities and Exchange Commission, during fiscal '00 RD's total book sales fell 6.3% to $831.5 million, a decline that was expected as part of the company's efforts to publish fewer titles more profitably. Select Edition was the only book division to post a gain in fiscal '00 with sales up 4.7% to $266 million. General book sales had the largest sales decline, with revenues off 12.5% to $444 million, while series books sales fell 3.2% to $121.5 million. Book sales figures do not include the Books Are Fun distribution business that was acquired October 1, 1999.