John Wiley & Sons reported a bumpy second quarter ended October 31 in which total revenue rose 3%, to $228.9 million, and net income, excluding a one-time tax benefit of $12 million in last year's second quarter, rose 13%, to $25.6 million. Among the company's three domestic segments, the higher education group had the strongest quarter with sales up 3%, to $37.7 million. Revenue in the STM segment increased 1%, to $42.7 million, while sales in the professional/trade segment fell 3%, to $86.5 million. International sales, benefiting from favorable foreign exchange, increased 9% in Europe and 14% in the Asia, Australia and Canada segment.
The decline in the professional/trade segment was attributed to lower backlist sales of consumer technology and business titles, partially offset by strong culinary and architecture sales. Wiley CEO Will Pesce said that within the segment, sales began to rebound in October after a slow start in the quarter and that the "early indications" for the holiday season were good. Wiley's general interest list got off to a promising start, Pesce said, and the struggling Frommer's travel unit was starting to do better. In addition, the professional technology segment showed some signs of improvement in the quarter.
The growth in the higher education group was led by the accounting/business, science and social science programs, which countered continued weakness in the engineering market. Sales to high schools were "off plan" due to states' budget pressures, Pesce said. In a conference call, Pesce told analysts that anecdotal evidence suggests that after remaining flat for the past several years, the used book market has slightly increased its share of college textbook sales over the last couple of semesters. He attributed the increase to the sluggish general economy and higher tuition.
In the STM segment, journal sales were up, but book and advertising sales were down. Pesce noted that Wiley InterScience, the division's online platform, now accounts for more than 60% of all journal revenue.
Among Wiley's international operations, Wiley's German subsidiary, VCH, had a solid quarter, and journal sales were up throughout Europe. Book sales, however, were sluggish in both the STM and professional/trade categories. In Asia, sales in India were good—India is now Wiley's second largest Asian market after Taiwan. Sales in Canada were disappointing, Pesce said, due to higher than anticipated returns of professional/trade books.
For the first half of fiscal 2004, total revenue increased 4%, to $448.5 million, and net income, excluding extraordinary items, rose 7%, to $47.4 million. Pesce said Wiley is "well positioned" to meet its financial targets for fiscal '04, which call for a revenue increase of 4% to 6% and a gain in earnings per share in the mid to high single digits.
Trade Initiatives
While Wiley's professional/ trade group had a soft second quarter, the unit embarked on a number of new programs. Three one-hour television shows based on the For Dummies line were shown on the Discovery Health Channel in September. The company is in negotiations with Target to create a For Dummies brand extension for the store. And next fall will mark the debut of a new 13-part television series featuring Mark Bittman, author of Wiley's How to Cook Everything, that Wiley is supporting. The show will include 30-second spot ads for Wiley books, and a book tie-in to the show is being developed.
