HarperCollins posted another year of solid gains for the fiscal year ended June 30 with revenue increasing 7.8%, to $1.16 billion and operating earnings rising 12.7%, to $133 million.
The growth in operating earnings was hurt by a soft fourth quarter in which profits plummeted to $4 million from $13 million. Sales were up 3.4%, to $242 million. The decline in profits was due in part to the Sher Distributing bankruptcy. The fourth quarter of fiscal 2002 also benefited from strong backlist sales, which yield higher margins, as HC president Jane Friedman pointed out.
Despite the fourth quarter glitch, Friedman said she was "pleased with the way the year went." The company's three major publishing divisions in the U.S. all had gains in sales and earnings in the year. And HC also rode the coattails of Harry Potter and the Order of the Phoenix; the company handles some back-office functions for Scholastic, and that helped fuel a 40% increase in revenue and a 52% jump in earnings in HC's third-party distribution unit.
The best performing publishing division was Zondervan, which had a 12% gain in sales and an 8% increase in profits. The gains were led by The Purpose-Driven Life, which sold about 4.5 million copies including ancillary products. In general books, profits rose 11% on a 10% sales gain, while sales in the children's group inched up 1% and earnings increased 7%. With sales through traditional bookstores sluggish, the mass market channel has become increasingly important for HC, and sales through those outlets rose 17% last year.
HC also continues to steadily grow its e-book business, and those sales doubled in fiscal '03. "I'm a believer in the format, but it will take time to build," Friedman said. HC has built its own e-bookstores, but the strongest growth has come through libraries with HC now receiving orders "in the thousands" from library systems, she said.
Friedman predicted fiscal 2004 will be "challenging": "We've had astounding years in Zondervan and kids and we'll have to see how that holds up." To help keep sales up, a major focus for the year will be "getting the right books in the right distribution channels," Friedman said.
But challenging year or not, Friedman remains upbeat about HC prospects and about publishing in general. "Our motto is good publishing is good business," she said, adding that "publishing is a profitable business and I don't anticipate ever not saying that."