Simon & Schuster ended 2010 on a positive note with sales increasing 5%, to $231.7 million, and adjusted operating income before depreciation and amortization (OIBDA) rising 32% to $20.1 million. The strong finish helped S&S to overcome a slow start, finishing the year with sales of $790.8 million, slightly down from $793.5 million in 2009. Adjusted OIBDA rose 33%, to $71.8 million and operating income increased to $60.9 million from $42.5 million. Adjusted OIBDA includes a charge for Borders which was offset by higher margins due to a change in product mix as e-books accounted for 8% of U.S. revenue in the year. E-book sales doubled in 2010, but the increase was not enough to offset the decline of print books on S&S’ top line. Adjusted OIBDA excluded restructuring charges of $3.7 million in 2010 and $3.8 million in 2009.
CEO Carolyn Reidy she hopes the provision S&S took in 2010 in anticipation of a Borders bankruptcy will not need to be repeated in 2011. “It’s a fluid situation. We’ll have to see,” she said. Borders put a damper on an otherwise solid year for S&S led, of course, by e-book sales, plus positive performances by S&S’ children’s division and the international group which was led by a strong performance in a difficult U.K. marketplace. Reidy said e-book sales have had an impact on hardcover sales as well as mass market paperback. She believes a growing number of customers are not waiting for the mass market paperback to come out and instead are buying e-books, especially in commercial fiction. She also said S&S is beginning to see more e-book sales of nonfiction, citing the recent performance of The Memory Palace. The well-reviewed memoir (including a PW star) has sold more e-books than print books in its first four weeks on sale, Reidy said. “That’s a sea change,” she said, adding that it was exciting to see an e-book do well where sales were driven, at least in part, by good reviews.
With a strong publishing schedule and a good finish to 2010, Reidy said that despite the uncertainty in the retail market, she believes S&S is poised for a good year. She is particularly high on a new addition to the spring list, David McCullough's The Greater Journey, set for May. Reidy anticipates that e-book sales will double again in 2011 hitting approximately 15% of the publisher’s U.S. sales in the year. “Consumers are responding to books in different ways,” Reidy said. “Good books still sell.”
