Borders's bankruptcy and soft demand for el-hi textbooks combined to drop revenue by 5% at Courier Corp. in the third quarter ended June 25, to $61.9 million. The sales decline as well as an $8.6 million impairment charge tied to a writeoff of goodwill for its Research & Education Association unit led to a loss of $3.2 million in the quarter compared to net income of $1.8 million in the same period in fiscal 2010.
REA’s sales have been highly dependent on Borders and as a result sales in the quarter dropped 21% at the imprint in the quarter. Sales in Courier’s other publishing units were also off, falling 10% at Creative Homeowner and 6% at Dover. Overall, revenue in Courier’s publishing segment fell 9%, to $9.9 million.
On the printing side, sales in rthe quarter fell 3%, to $55 million, as Borders’s demise and the transition from print books to e-books dropped sales in the trade manufacturing segment by 23%. Sales in the education segment rose 10% as demand for college textbooks, particularly for customized editions, offset soft el-hi demand. Religion sales fell 3%.
“The situation at Borders continued to be a major thorn in our side,” said Courier chairman and CEO James F. Conway III in a statement. “The resulting shrinkage in trade demand affected both our own publishing segment and the publishing customers we serve as a manufacturer.” Conway said while Courier had expected demand for trade book manufacturing to weaken "the slump proved deeper than we had anticipated, with many trade publishers holding back on ordering and others reducing quantities in the face of a diminished sales channel<' Conway said.
While Conway said he expects the fiscal fourth quarter to once again be the biggest of the year, he said “the Borders situation continues to cast a shadow over both if our business segments,” while e-book sales will continue to represent a larger part of trade book sales. As a result, Courier lowered its guidance for the quarter and full year and expects sales for the year to be between $258 million and $263 million compared to fiscal 2010 revenue of $257 million, while earnings per share will be between 70 cents and 80 cents compared to 85 cents last year. Both figures exclude one-time charges, and the guidance, Courier added does not include possible future impairment of restructuring charges.
For the first nine months of the year, total sales slipped to $185.7 million from $186.9 million, and Courier had a net loss of $6.3 million compared to earnings of $6 million in the same nine month period in fiscal 2010.
