Despite a sales increase of less than 1%, to $202 million, in the fiscal year that ended September 27, Courier Corp. reported that income from continuing operations rose 18%, to $19.3 million. The company attributed the improvement in earnings to market share gains in its manufacturing operations as well as higher productivity throughout the company. Courier's year-end results included a soft fourth quarter in which sales fell 1%, to $53.5 million, although income from continuing operations rose 6%, to $7 million.
In its book manufacturing segment, sales in fiscal 2003 rose to $171.8 million from $170.4 million, while pretax earnings increased 22%, to $24.2 million. Sales to the education market increased 6% in the year led by an 11% gain in sales to the college market. Sales to the elhi market had a strong fourth quarter, up 16%, but sales in the sector were still down 3% for the year. Courier's sales to the religion book market fell 2% in fiscal 2003, the first decline in 10 years. Company executives said the drop was due mainly to weaker demand for religion trade titles. Sales to the trade market rose 4% for the year despite an 11% decline in the fourth quarter, which executives blamed on a drop in sales for computer game books.
Jim Conway, Courier chairman, said the company's manufacturing business was led by a 16% increase in four-color work. To accommodate the trend among publishers to print more of their titles in color, Courier has ordered a new four-color press that will go online next spring. Courier is also printing more covers, Conway said. He predicted that sales will grow in all three of Courier's manufacturing segments for fiscal 2004, and said he expects overall growth in manufacturing of 5% to 7%.
Dover Chain Sales Decline
At Courier's Dover Publications subsidiary, revenue increased 1%, to $36.4 million in the year, while pretax earnings rose 20%, to $5.8 million. The sluggish growth at Dover was attributed primarily to a 22% decline in business with the bookstore chains. The weak performance at the chains offset gains to non-bookstore outlets (the company added 500 new gift and stationery stores last year), higher online sales and a 15% increase in international sales. Dover also upped its title output in the year by 20%, releasing 643 new titles in fiscal 2003. The "top priority" at Dover in fiscal 2004 is to return sales growth to double digits, Conway said.
Conway said in a conference call that while he was disappointed in sales to the chains, he was "confident" of an improvement in fiscal 2004. Bob Story, Courier chief financial officer, told PW that slow customer traffic at Barnes & Noble and Borders in the first half of the year was the main reason behind the drop in sales. He noted that Dover sells its titles nonreturnable and that with fewer customers in its stores it took B&N and Borders longer than usual to sell their Dover inventory. Selling nonreturnable is an important reason why Dover can offer many of its classic titles at very low ($2) prices, although Story noted that because the price points are so low the chains tend not to carry Dover's classic lines.
Story said Dover is working on different programs with both B&N and Borders to boost sales this year. The company did very well at Borders last year with an origami book package it developed at the request of the chain; Story hopes similar projects will be created this year.
