Total revenue at Quarto Group slipped 2.8% in 2012 to $180.9 million and EBITDA dipped to $11.4 million from $12.1 million. The last year saw a changing of the guard at the U.K.-based publisher when cofounder Laurence Orbach was replaced as chairman by Tim Chadwick, while Marcus Leaver, formerly head of Sterling Publishing, took over as chief operating officer in April and was named chief executive in December. Given the internal changes and challenging marketplace, Leaver said Quarto “did okay” in 2012.
Leaver has reorganized the company into four segments--Quarto International Co-editions, UK; Quayside Publishing Group, USA; Aurum Publishing Group, UK and Lifetime/Premier Display Marketing, Australia & NZ--and said he will continue to review the company’s entire business portfolio. That review, which has the backing of Chadwick, is likely to lead to some asset sales, with the proceeds from any sales going to lower its debt levels, which is a priority for 2013. The review could also result in the “merging” of internal units, the company said.
Leaver told PW that while reducing debt and improving Quarto’s marketing and distribution capabilities will be the focus for 2013, he is very much interested in growing the company. Leaver said he will use 2013 to create the foundation “to build a new Quarto,” adding that he expects the Quarto of March 2014 to look different than the way it looks today and even more different two years from now.
The reorganization of 2012 brought more transparency to the group, with results released for the four main segments as well as by geography. Leaver explained that his reasoning in reorganizing the reporting structure was to show that Quarto operates in four very different businesses with different characteristics and fundamentals. In the U.S., Quayside sales fell 12.2%, to $59.4 million, from $67.7 million, while international co-edition sales fell to $41.3 million from $43.4 million. Sales at Aurum Publishing rose to $21.9 million from $15.7 million, and revenue at ANZ Display inched up to $34.6 million from $34.4 million.
In his prepared remarks Leaver called the results of Quayside a “resilient performance in a very difficult environment.” The two most significant factors in the sales decline were the losses of the category manager role at at the 1,000-store Tractor Supply Company, which resulted in a decline of some $4 million of revenues, and the decision by Home Depot to stop carrying most books. Among the changes made at Quayside last year were taking on distribution of all of Aurum’s adult publishing lists in the U.S. and Canada, teaming up with the Quarto foreign language team to sell its foreign language rights, and teaming up with Aurum to sell its books in the U.K. and through Aurum’s export sales department. E-book revenues totalled $2,1 million last year, up from $1.4 million, with Fair Winds being the largest contributor. All digital sales totalled $2.4 million last year, up from $2.1 million. Given Quayside reliance on illustrated books, Leaver said the key for the company is to deliver quality content, and until recently digital delivery didn’t offer a compelling reader experience. Still, Quayside, and all Quarto divisions, must be prepared to deliver content however consumers want it.
While Leaver’s longer-range plans involve expansion, including growing in the children’s book market, he reiterated that 2013 will be used to strengthening Quarto’s foundation. Quarto has always had a good product, he said, but before adding more titles, “we need to be able to sell the books we have better.”
