Harlequin had another difficult period in the third quarter ended September 30, parent company Torstar Corp. reported last week. Sales fell 11.2%, to C$135.8 million ($111 million), and operating profit plunged 35.6%, to C$23.3 million ($19 million).
Sales were down in all of Harlequin's markets in the period, and Torstar president Robert Prichard observed that the North American mass market paperback market "continues to be very challenging." Sales to the North America retail segment dropped C$9.4 million in the quarter, which the company attributed to lower net sales in both its single-title and series lines, as well as to some differences in the publishing schedule. Price increases helped somewhat to offset declines in unit sales.
Direct-to-consumer sales fell C$3.6 million, due to a declining customer base, which Torstar said is "the result of competitive pressures from alternative distribution channels and reduced availability of mailing lists."
In overseas markets, sales declined C$3.8 million as the U.K., Japan and France all had lower sales. Although Harlequin eliminated a total of 28 positions in its North America and U.K. operations in the quarter, executives said they don't plan significant staff reductions. "This is a marketing business. You can't cost cut your way to glory," executives said.
Torstar is not expecting Harlequin to rebound in the fourth quarter. "The mass market paperback segment continues to be highly competitive, challenging and soft," the company stated. It said results in the fourth quarter are expected to be soft compared to the fourth quarter of 2003, and that earnings will be comparable to the second and third periods.
Despite the problems, the company will not reduce its number of titles, but is changing its editorial content to make it more relevant to current tastes, executives said. It is also looking to enter the large print and audio markets and to sell more books through its Web site.
