Reporting gains in virtually all areas of its business, Penguin Group reported worldwide sales of 408 million pounds ($812 million) in the first half of 2008, an increase of 11% over 2007, while operating profits rose 44% to 26 million pounds ($51 million). Unlike most recent periods, Penguin benefited slightly from currency fluctuations in the first six months of 2008. Penguin chairman John Makinson said that while all territories did well—“there isn’t a weak performance to point to”—it was the “exceptional” results turned in by the U.S. that drove the gains.
A record number of bestsellers led the increase at Penguin USA, particularly in the adult group where hardcover, trade paperback and mass market paperback all had strong gains. Led by Putnam, most adult hardcover imprints had significant increases in bestsellers in the period, while the trade paperback segment was driven by The New Earth, which now has 5.8 million copies in print. In mass market paperback, the number of bestsellers rose by 92% in the first six months. Augmenting sales of traditional print editions were a doubling of audio book sales and big gains in e-book sales. “E-books really seem to be working,” noted Penguin USA CEO David Shanks. Penguin currently has 3,500 titles in e-book format and plans to have 6,500 available by the start of 2009. Sales through Penguin’s own Web site rose 11% in the period.
While Penguin’s first-half performance was led by frontlist adult bestsellers, he said the positive signs he saw in June and July included a pick up in backlist across much of the Penguin list. He also cited a “new spirit” in the Young Readers group and he expects that division to have a good finish to the year. In July, Shanks noted, every division hit budget.
Makinson and Shanks were cautiously optimistic about the second half of 2008, despite slowing economies in many parts of the world. “If business stays how it is now, we’ll be okay,” Shanks said. Makinson said that despite facing some tough comparisons in the second half of 2008—Penguin USA had a particularly strong fourth quarter—he is confident the group will finish the year with a solid gain and is in position to achieve Pearson’s goal of a 10% operating margin.
