A 38% plunge in sales in its education group during the second quarter of 2020 led to an overall decline of 35.5% in sales at Houghton Mifflin Harcourt compared to a year ago. Total revenue was $251.2 million in the quarter, down from $388.9 million in last year’s second period. Costs cuts, however, limited the net loss to $38.2 million, less than the $40.6 million in the second quarter of 2019.
In HMH’s Book & Media division, sales fell 10.1% in the quarter, to $35.2 million. HMH said the decline was due to a decrease in sales in both its adult and young readers segments, which the company attributed to the closure of bookstores due to the pandemic, as well as to delays in the publication of new frontlist titles. Like the entire company, however, the trade division’s bottom line improved slightly in the quarter because of cost cuts and lower expenses.
Among the cost-saving measures implemented by HMH in the second quarter were a reduction in the work week to four days and lower discretionary spending. HMH said it ended the four-day work week program at the end of July, but that it has begun an early retirement offering for employees 55 and older and who have been at the company for at least five years. HMH said that about 625 employees, or 18% of its workforce, are eligible for the program, which the publisher said it expects to conclude in the current quarter.
Due to the continued uncertainty caused by the Covid-19 pandemic, HMH withdrew its financial forecast for 2020 earlier this year. HMH CEO Jack Lynch said while educational sales took big hits in April and May, “we experienced a more normal environment in the month of June."
Because of the continued uncertainty of the course of the virus, HMH did not make any new predictions for the remainder of 2020. The company said its current assumptions are that “businesses will reopen for selling and school districts will continue to resume purchasing and most or all will become operational, either in-person, fully remote or hybrid, during the third quarter of 2020.”
HMH said that as schools reopen it expects to see the move toward the use of more digital products continue. “As we focus on the acceleration of our digital first, connected strategy, we are partnering with and supporting customers nationwide in this unique back to school season,” Lynch said in a statement.
