Higher manufacturing and freight costs, the impact from ongoing supply chain and inflationary pressures, as well as a change in title mix limited earnings growth in the fiscal year ended June 30, 2022 to 1% over fiscal 2021 at HarperCollins, despite a 10% increase in sales. Boosted by a $149 million contribution from the May 2021 purchase of the Houghton Mifflin Harcourt trade group, revenue at HC was $2.19 billion and EBITDA (earnings before interest, taxes, depreciation and amortization) rose to $306 million from $303 million.
According to HC parent company News Corp, book sales were up at HC U.K., while the general books group in the U.S. had strong frontlist sales, led by The Storyteller by Dave Grohl, Pioneer Woman Cooks: Super Easy! by Ree Drummond, and The Stranger in the Lifeboat by Mitch Albom. (Sales also had a $20 million benefit from an additional week in the current fiscal year compared to fiscal 2021). Sales of the Bridgerton series, which skyrocketed in fiscal 2021 due to the release of the Netflix series based on the first book in the line, fell $16 million in the year.
Digital sales increased 4% compared to the prior year, News said, driven by continued growth in downloadable audiobook sales. After rising in fiscal 2021, e-book sales fell in fiscal 2022. For the year, digital sales represented 21% of HC’s Consumer revenue for the year, down from 22% in fiscal 2021.
In a conference call with analysts News Corp CFO Susan Panuccio had brief remarks about HC, noting that “supply chain and inflationary pressures continue to persist.”
Both Panuccio and News Corp CEO Robert Thomson predicted that the Amazon Prime release next month of the Rings of Power will result in huge boost in sales for the Lord of the Rings books on which it is based. The series, Thomson said, “is going to have a profound impact on HarperCollins' performance, and the related publicity will no doubt stimulate sales. We're not in a position to give you an accurate forecast for the future, but it is fair to say it's going to be a significant moment for HarperCollins in coming months.” Panuccio added that since LOR titles are backlist, higher book sales should also result in more profitable sales.
Asked if News Corp has a way to cut costs if the economy slows, Panuccio said the company as plans on how to counter supply chain and inflationary pressures on manufacturing at HarperCollins.
