Houghton Mifflin officially named Tony Lucki its new CEO last week, several weeks after it was reported that he was negotiating with Reed Elsevier to be let out of his contract as president of Harcourt Inc., Reed's elhi and trade publishing unit. Lucki, who starts at HM October 1, previously worked there from 1977 to 1987, rising to executive editor in the school division's reading department. Lucki replaces Hans Gieskes, who resigned last month. With Lucki's departure, Harcourt's management team will report to Pat Tierney, global CEO of Harcourt Education.
On the day it announced it had hired a new CEO, Houghton also revealed it had spent more than $10 million during the second quarter to both keep and shed top employees. HM paid Gieskes $3.2 million in severance, while also spending $7.1 million in incentives to keep managers from defecting amid uncertainty at the house.
"When this company was put up for sale for the second time in 16 months, it was deemed necessary to offer retention bonuses to keep key executives," explained interim CEO Sylvia Metayer.
Lucki will be joining a company that had a strong gain in revenue in the second quarter, with total sales up 16.8%, to $361.3 million, although income from continuing operations fell to $5.7 million from $7.9 million.
All three of HM's major segments had sales gains in the year. Sales in the elhi operation jumped 21%, to $280.3 million, which the company attributed to strong sales of HM's elementary reading series and adoptions of its secondary school social studies and literature programs. Orders and shipments were more heavily weighted to the second quarter this year than last year, so sales growth is expected to be slower in the second half. Testing sales were also up.
Sales in the college segment rose 8%, to $32.9 million, due to the success of new frontlist titles. The trade and reference group had a sales gain of 9%, to $30.2 million, due mainly to the inclusion of $4.2 million in sales from Kingfisher Publications, which HM acquired last December. The increase was partially offset by lower children's book sales.
Metayer said HM expects to see modest sales growth for the entire year and increased sales margins. Acquisition-related costs, interest expenses and other charges will result in a net loss in continuing operations for the year.
