In an announcement released Monday in the U.K, the Quarto Group said it will report lower than expected results for the first half of 2017. The publisher did note, though, that it expects business to improve in the second half of the year.
In a statement, chief executive Marcus Leaver said: "The interim results will reflect the ongoing soft retail environment in the group's domestic markets, resulting in a lower-than expected trading performance in the year to date, as well as a more pronounced second-half weighting. " Leaver added, though, that he expects a stronger publishing program "combined with the continuing resilience of [Quarto's] enduring backlist" to lift the company in the second half.
Calling this year a "transitional" one for Quarto, Leaver said that as the company has refocused on its core publishing business--in part by selling off some assets--the soft retail market in both the U.S. and the U.K. "means that our results will be even more second-half weighted than in previous years."
The announcement also signaled that financial predictions for 2017 given earlier this year were too high. Leaver explained that in preparing results for the first half of the year, Quarto had been reviewing its previous guidance.
"This process has revealed that the guidance currently in the market uses a publishing-only baseline for 2016 that does not reflect the benefit of $2.1 million relating to the reduction in the amortization of capitalized pre-publication costs--as explained in the FY 2016 results announcement on March 31, 2017, and in the group's annual report. As a result, the baseline guidance for 2017 and beyond has been set too high," Leaver said.
In conclusion, Leaver said: "We are making good progress towards our strategic objectives and becoming more operationally agile to respond better to an ever-evolving market environment. We look forward to announcing the appointment of a new CFO in due course and to enjoying the full benefits of our new organisational structure and systems upgrade by year-end."
Editor's Note: A version of this story first appeared in BookBrunch.
