Total revenue at John Wiley & Sons rose 5% in the third quarter ended January 31, rising to $447.9 million, while operating income increased 2%, to $69.6 million. Excluding the negative impact of foreign currency exchange, sales rose 7%. Earnings reflect the $9.3 million bad debt charge taken for Borders; excluding that charge and a $2.8 million restructuring charge in last year’s third quarter, adjusted operating income rose 11% in the period or 16% excluding foreign currency. According to Wiley, top-line results and improved margins due to higher revenue from digital products drove the earnings improvement. Technology Services expense increased approximately 28% to $32 million reflecting investments in digital products and infrastructure, such as WileyPLUS, e-books, backfiles, and Wiley Online Library.
Sales in the professional and trade division rose 7%, to $114.5 million, aided by a doubling of e-book sales, which rose to $5 million, as well as strong gains in the business and cookbook segments. For the first nine months of fiscal 2011 e-book sales were $15 million. In a prepared statement, Wiley CEO Will Pesce noted that Wiley has relied on Borders for a decreasing amount of sales; the chain was projected to account for less than 5% of professional/trade revenue in fiscal 2011, down from more than 10% a few years ago. “Customer purchasing patterns continue to shift, as reflected in the sales of e-books, the success of online retailers, and the performance of some brick and mortar booksellers. Wiley is well-positioned to capitalize on this shift as a result of our publishing strategy and multi-channel selling around the world,” Pesce said.
Third-quarter sales in Wiley’s STMS segment increased 4%, to $237.9 million, driven by higher institutional sales. Sales in the higher education segment rose 4%, to $95.4 million. Sales of e-books, digital content sold directly to institutions, binder editions and custom publishing rose 24%, to $16 million, and WileyPlus sales increased 13%, to $13 million.
For the full fiscal year, Pesce said Wiley expects revenue to rise in mid-single digits on a currency neutral basis, while earnings per share will increase about 10% excluding foreign exchange, the Borders bad debt and the first quarter deferred tax benefit.
