The shift of print sales to e-books and higher returns caused in part by Borders bankruptcy led to lower sales and profits in the second quarter at Harlequin. Sales fell 6.4%, to C$110.3 million ($115 million), while operating profit dropped to C$16.3 million ($17 million) from C$20.6 million. Currency fluctuations also had a negative impact on sales.
Parent company Torstar reported that retail print sales fell C$10.8 million in the quarter, offsetting a C$7.3 million increase in digital sales. The combination of rising e-book sales and falling print sales resulted in digital sales accounting for 15% of total revenue in the quarter compared to 7% in last year’s second quarter.
North America division sales were down C$4.7 million in the period and overseas division sales were off C$2.6 million.
For the first six months of 2011, revenue fell to C$225.7 million from C$230.6 million, and operating profit declined to C$38.3 million from C$43.5 million.
Torstar said that it expects book returns to be lower in the second half of 2011 compared to the first six months as Harlequin has made adjustments in the number of copies it is printing. As a result, Torstar said it expects that earnings will improve in the second half of 2011 and, excluding foreign exchange, profits for the full year should be even to slightly up compared to 2010.
