Printer and publisher Courier Corp. is one of the first publicly-traded companies to report a meaningful negative impact from the Borders' bankruptcy. In disclosing disappointing second quarter results for the period ended March 26, Courier said the bankruptcy contributed to a decline in its publishing group sales while also hurting results in the manufacturing group. In addition, Courier took a write-down of $750,000 to cover Borders' bad debt.
The Borders bankruptcy was not the only event that impacted Courier. The closing of its Stoughton, Mass. plant that printed paperbacks resulted in a one-time charge to earnings. As a result, Courier reported a net loss in the quarter of $4.8 million compared to earnings of $1.4 million in last year's second quarter. Without the charges, net income would have been $350,000. Revenue in the period rose 6%, to $62.7 million.
Sales in the manufacturing segment rose 11% as a big order from its biggest religion publisher led to a 50% jump in sales in religion printing, while sales to the education market increased 2% as gains in printing four-color college texts offset slow el-hi sales. Printing in the trade segment, however, fell 9% due to publishers cutting back orders because of Borders.
The Borders' impact was more pronounced in the publishing segment as Courier noted that the chain accounted for 9% of revenue in last year's first six months but only 2% this year. The hardest hit was REA, for which Borders was its single largest sales channel. Dover was able to mitigate the impact of Borders with higher sales through online retailers and Creative Homeowner benefitted from increased sales at home improvement centers. In all, sales in the publishing segment in the quarter fell 14%, to $10.1 million.
In a statement, Courier chairman James Conway said "the Borders situation promises to be a continuing challenge for both segments of our business." Still, Courier expects sales for the full fiscal year to be between $271 million and $280 million compared to $257 million in fiscal 2010, with earnings per share also expected to rise.
