Profits Up Nearly 13% At Simon & Schuster

Although Simon & Schuster had only a tiny increase in revenue in 2015 over 2014, operating income at the publisher rose 12.9%, yielding a healthy operating margin of 14.6%.

The full-year results were bolstered by an extremely strong fourth quarter in which earnings jumped 34% over the final period in 2014, to $34 million, while revenue rose 8%, to $233 million.

S&S CEO Carolyn Reidy attributed the improvement in profits to a number of factors, including continued investment to make its operations more efficient and realigning S&S’s organization to make it more reflective of the way publishing operates today. Higher sales of backlist titles, which are more profitable than frontlist, also contributed to the profit gain, as did lower returns. Returns “have been trending down,” Reidy said, adding that “you don’t need returns to go down much to see a rise in profitability.” The final factor in improving profits, according to Reidy, was that the books they paid high advances for performed well.

Among the publisher’s top sellers in 2015 were The Wright Brothers by David McCullough, Bazaar of Bad Dreams and Finders Keepers by Stephen King, Crippled America by Donald Trump, and a host of titles by YouTube personalities. The ninth and 10th volumes in Rachel Renee Russell’s Dork Diaries series led sales in the children’s group.

E-book sales fell in the year, while sales of digital audio increased between 35% and 40%, Reidy said; digital products accounted for 25% of total revenue in 2015 (about $195 million), compared to representing 26% of revenue in 2014 (about $202 million). The dip in digital revenue was offset by a rise in print sales. In addition to an increase in sales in its audio division, sales in the children’s group rose, while sales in the adult division were flat, Reidy said.

Reidy was optimistic about prospects for 2016, pointing to two titles that could be among 2016’s biggest sellers: the just-signed memoir by Bruce Springsteen and a memoir from comedian and actress Amy Schumer. And Reidy said S&S will continue to work to “identify and establish new fiction authors.” She added, “The market has shown readers are looking for new voices.” Reidy said she expects S&S to continue to publish new titles by YouTube and other social media celebrities.

From a strategic standpoint, Reidy said the company will devote more resources to its direct-to-consumer initiatives and will look to grow its distribution business, which currently has 50 clients. S&S’s new warehouse will be completed this quarter, and Reidy is eager “to fill the warehouse with new clients.”

Simon & Schuster Organizational Chart

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Simon & Schuster Operating Performance

($ in millions)