Courier Reports Education Sales Up, Borders Fallout Induces Loss
Publishing: channel erosion at Borders
Courier’s specialty publishing segment includes three businesses: Dover Publications, a niche publisher with thousands of titles in dozens of specialty trade markets; Creative Homeowner, which publishes books on home design, decorating, landscaping and gardening; and Research & Education Association (REA), a publisher of test preparation books and study guides.
Third-quarter revenues for the segment were $9.9 million, down 9 percent from $10.9 million in last year’s third quarter, with reduced sales to Borders accounting for more than two-thirds of the shortfall. The segment’s operating loss for the quarter was $1.2 million, vs. a loss of $0.4 million last year.
For fiscal 2011 to date, segment sales were $30.8 million, compared to $34.1 million for the first nine months of fiscal 2010. The segment’s operating loss through nine months was $3.2 million, excluding the second-quarter bad-debt provision for Borders, vs. a loss of $925,000 for last year’s first nine months.
Fallout from the impact of the Borders bankruptcy continued to affect all three publishing businesses, but was most acute at REA, where sales were down 21 percent in the quarter and 29 percent for the first nine months of the year. Despite this drop, REA remained profitable in the quarter, helped by the continuing popularity of its AP Crash Course books. However, given the current situation at Borders, Courier recorded an impairment of all of REA’s goodwill through a pre-tax, non-cash charge of $8.6 million or $.43 per diluted share.
Meanwhile, results varied through other sales channels. Reduced traffic at home improvement centers continued to hurt Creative Homeowner sales, down 10 percent in the quarter and 11 percent year-to-date. But at Dover, increases in online and international business partially offset the decline in Borders sales; for the quarter, Dover’s sales were off 6 percent.
“It has been a tough year for bricks-and-mortar booksellers and the publishers who serve them,” said Conway. “In response, all of our publishing businesses have become leaner and more focused; as a result, for example, Creative Homeowner was able to cut its third-quarter loss to less than half of last year’s. Equally important, all three businesses continue to produce outstanding titles, including two Gold winners in the 2011 Benjamin Franklin Awards and a Bronze winner in the Independent Publisher Book Awards. And our growth in online and international sales testifies to our strong connection to readers and families everywhere.