Net income continued to soar at Thomas Nelson with the publisher reporting a 59% increase in earnings, to $3.9 million, for the third quarter ended December 31. Sales increased 4%, to $56 million. For the nine-month period, net income was up 68%, to $11.6 million, on a revenue increase of 3%, to $161.7 million. Nelson chairman Sam Moore told analysts in a conference call that while he wasn't sure sales would increase in the fourth quarter over the last quarter of fiscal 2003, he said the trend for profit growth remained intact. "I think we're headed to our most profitable year ever," Moore said.

Joe Powers, Nelson treasurer, said the company has been able to improve operating margins by focusing on selling better-quality, higher-priced products; lowering returns; and lowering the amount of unearned advances. Mike Hyatt, recently installed president of Nelson, explained that while margin improvement has been Nelson's top priority the last several years, in fiscal 2005 Nelson will be concentrating on increasing sales.

Two initiatives designed to boost sales are Nelson's efforts to grow its inspirational fiction line and to increase its business in the general (ABA) market, Hyatt said. Fiction only accounts for about 5% of Nelson's revenue, and Hyatt said he believes Nelson has "a real opportunity" to grow in that market. In addition to fiction, Hyatt said Nelson's business and gardening titles and books in its WND imprint should help the company expand in the ABA market.

Through the first nine months of the year, sales through general bookstores were up 30%, Powers said, although that channel accounted for only 14% of sales. Business to the CBA market, which represents 33% of revenue, was flat, while sales to mass merchandisers (14% of sales) was down 10%. Direct marketing sales, which account for 23% of total revenue, were off 7% in the nine months.

Another source of new revenue is the Nelson Enrichment program for Christian book fairs, which the company launched in the third quarter. The program generated $1 million in the quarter, and the company thinks it can become a $10- million to $20-million business in three to five years.