Currency fluctuations and lower sales in the North America retail and overseas markets resulted in a 9.4% decline in total revenue in the first quarter at Harlequin with sales falling to C$112.8 million ($104.5 million). Sales in the North American direct-to-home market rose in the period due to “significant” growth in digital revenues while traditional sales were flat, parent company Torstar reported. Despite the sales decline, operating profits rose 10.2%, to C$22.7 million. Lower promotional spending was cited as one reason for the profit improvement.
Lower retail sales in North America were attributed to lower unit sales and higher returns. In its overseas markets, sales were down in Japan and France, more than offsetting growth in Australia, Holland and Germany. Torstar said the decline in Japan was due to a “very difficult book industry” and lower revenue from its deal with Softbank to distribute digital manga content on cell phones and the Internet.
Harlequin has a mixed outlook for the remainder of 2010, due in part to the strengthening of the Canadian dollar. Torstar said the growth in North America digital sales and the April buyout of its German partner is expected to offset the expected decline from the deal with Softbank. If the Canadian dollar continues to remain at current levels, a C$5.5 million negative impact on earnings is expected.
