Simon & Schuster finished 2012 with a bump in sales to $790 million from $787 million in 2011, but operating income dipped to $80 million from $83 million due in part to costs associated with settling three e-book price fixing cases brought by the Department of Justice, 49 states plus the consumer class action. With the "considerable costs" of the various litigations and settlements, S&S would have had "a stupendous year," CEO Carolyn Reidy said, who added that all the costs with the suits are now behind S&S.
Digital sales remained strong through the year, up 35% over 2011 and accounted for 23% of total revenue in the year, up from 17% in 2011. In audio, Pimsleur had a particuarly strong year in digital downloads as it increased its direct-to-consumer efforts. E-book sales finished 2012 representing 20.4% of wordwide revenue, up from 15.4% a year ago. Reidy noted that for some types of books, such as commercial fiction, e-books account for at least 50% of sales.
In addition to the audio division, the children's division had a sales gain in the year as did international. Sales in the adult group were off, which Reidy attributed to tough comparisons to 2011 which had the Steve Jobs and 11/22/63 hits.
Among the publisher’s top sellers in the year were two from Vince Flynn, Kill Shot and The Last Man, Stephen King’s The Wind Through the Keyhole, Lone Wolf by Jodi Picoult and Glenn Beck’s Cowards. Trade paperback was led by Eben Alexander’s mega-seller Proof of Heaven, while Cassandra Clare’s City of Bones and City of Fallen Angels, Out of My Mind by Sharon Draper and Dork Diaries 4 and 5 by Rachel Renee Russell led the children’s list.
In the fourth quarter, sales fell 6%, to $215 million, but operating income increased 8% to $27 million. Sales fell as strong growth in digital book sales was more than offset by lower print book sales. Digital book sales increased 24% in the quarter and represented 24% of total S&S revenue in the period. Higher digital sales, however, were largely responsible for improving profits in the quarter. In the period, S&S took a $3 million restructuring charge compared to a $2 million charge in the last quarter of 2011. Last October S&S restructured its adult publishing group.
Reidy said her biggest concern in 2013 remains protecting the health of physical retailers. "The shift in the retail envirnoment is a worry. We need retailers for book discovery," she said. Reidy also remained optimistic that the just launched Bookish will help customers find books and she is confident the site will generate enough consumer traffic to make the business work.