Despite a slight drop in profit margins in the U.S. because of heavy returns, total operating profit for HarperCollins rose 4.5% for the third quarter ended March 31, to $23 million. Revenue increased 2%, to $247 million.
The slight revenue gain in the U.S. was led by HC's Zondervan division, which continued to enjoy strong sales of The Purpose-Driven Life by Rick Warren. The title has about 2.6 million copies in print and in addition to selling well in the Christian market, "has broken through in the ABA market with a vengeance," said HC CEO Jane Friedman. Sales in HC's general books group were up slightly, though returns brought profits down and sales in the children's group were down "compared to a stellar year in last year's third quarter," Friedman said. She said results in the quarter pointed out the strength of HC's portfolio approach to publishing, noting that the good performance by Zondervan was able to offset weaker results in other parts of the business. Despite the somewhat uneven results, Friedman asserted, "There were no surprises in the quarter and there won't be any in the fourth quarter."
Friedman said that while she was satisfied with the third quarter, she told PW she was more pleased by HC's worldwide results for the first nine months of the year. Operating profits in the nine-month period were up 22.9%, to $129 million, on a 9% revenue gain, to $920 million. "We're in very good shape to end the year right where we thought we would be," Friedman said. In the U.S., general book sales were up 17% in the nine months and profits increased by 51%, while children's book sales were ahead 5% and profits rose 15%. Backlist sales have been healthy for most of the year, with Friedman noting that Good to Great now has nearly one million copies in print, while Stupid White Men is up to 900,000 copies.
While some publishers have reported soft sales through the major bookstore chains, Friedman said HC's sales through those outlets are up, which she attributed to the efficiency of HC's supply chain. HC does not subscribe to Bookscan, but Friedman said the company gets enough point-of-sale data to manage its inventory well. "Bookscan is a great service. I just think it's too expensive," she said.
With the U.S., U.K. and Australian subsidiaries all on track for the year, Friedman said the "only issue" is whether the Canadian operation will be profitable. She said the uncertainty stems from high returns from Indigo. Looking at fiscal 2004, Friedman said she is "budgeting for another year of growth."
