With sales in both its co-edition and publishing divisions showing gains, revenue at Quarto Group rose 5.5% in 2011 to $186.1 million, the U.K.-based publisher reported. Adjusted pretax profits rose to $12.1 million from $11.5 million. The gains came despite only minor improvement in the U.S., which accounted for 55% of revenue. Sales in the U.S. rose 1%, to $82.8 million, as the acquisition Cool Springs Press (for $3 million) and sales of its Walter Foster imprint offset soft results in Quarto’s transportation and graphic design lists.
In breaking down results by segment, publishing sales rose 6%, to $123.6 million, helped by the Cool Springs purchase as well as that of the U.K.’s Frances Lincoln (for $7.3 million). E-book sales rose 500%, but at $2.1 million, comprise only a small portion of overall revenue. In his chairman’s statement, Laurence Orbach acknowledged that Quarto is moving cautiously in the e-book field, believing that the technology is not yet developed enough to allow Quarto to put its almost entirely nonfiction books into enhanced digital formats. " [Our] efforts to build both apps and e-books around the kind of content we create have not been well rewarded,” Orbach wrote. “This is not surprising, as they have not taken advantage of the benefits that the new tablet computers and e-readers now offer. At the moment, and seeking to take advantage of better and less cumbersome software authoring tools, more efforts are being made to create enhanced e-books. No doubt, some will turn out to be very fine, but it remains unclear whether there is a profitable commercial model lurking in all of the experimentation.”
In its co-edition publishing segment, sale rose 4%, to $62.5 million. For the book business, revenues were flat and the distribution was sharply changed from the prior year, Orbach said. “Europe accounted for 41% (2010: 39%), the US was down to 27% from 31%, and the UK's portion rose to 15% (2010: 12%). As reprint sales drive the overall revenues of the segment, the US number highlights the hesitation of co-edition licensees in the aftermath of the collapse of the Borders book chain, and their preference for playing safe by ordering reprints of already successful titles. However, as the biggest single decline was in our supplementary education imprint, facing the impact of significant cutbacks in school budgets, at least a part of downturn was expected, as the sputtering signs of growth, early in 2011, slipped away.”
A top priority for Quarto is to put in pace a succession plan for Orbach. The company expects to soon hire a chief operating officer and Orbach said that if things proceed as planned he will step down as CEO (while continuing as chairman) after a year or so
