A 15% sales increase in its trade publishing business was one of the highlights in Reader's Digest's third quarter, which ended March 31. The company said the gain in its trade unit was due to the "outstanding performance" of its Movie Theater Storybook and Projector product line, which enjoyed strong sales through retail and special sales channels. The trade division is part of RD's consumer business services group, which had a 1% sales increase, to $129 million, in the quarter. The increase in the trade division was somewhat offset by a 2% decline in revenue at Books Are Fun due to lower sales in the corporate fairs division.
In the RD North America segment, sales fell 3%, to $197 million. The U.S. Books and Home Entertainment group was one of several areas where sales fell in the quarter, although profits at BHE rose. Book sales in the Reiman division fell slightly due to a dip in sales of annuals.
Sales in the international segment increased 1%, to $238 million, which was due entirely to currency fluctuations. Excluding currency translations, sales fell 11%. Operating profits increased to $14 million from $4 million in the comparable period last year. Cost reductions, reengineering efforts and better execution were cited as reasons for the improvement in earnings.
For the entire company, sales fell 2%, to $561 million, but the company reported net income of $2 million compared to a loss of $5 million in the third quarter of fiscal 2003. RD chairman Thomas O. Ryder said the gain in the third quarter was in keeping with the company's long-term plan that called for an improvement in second-half results in fiscal 2004 following a weak first six months.
Just after the close of the quarter, the trade division signed a licensing agreement with NASCAR to publish children's auto racing books in a variety of formats. Harold Clarke, v-p and publisher of RD's trade group, said he expects to publish six to eight titles annually in the three-year deal. The first three titles will be out in June and will include one book in RD's CarryAlong line and two paperback titles for middle-grade readers. Additional products will include game books, poster books and card sets featuring NASCAR drivers.
