Despite a disappointing performance in its higher education group for the first quarter ended July 31, executives at John Wiley & Sons said they still expect sales and earnings growth to be in the mid-to-high single-digit range for the full year. Total sales for the company rose 3.3% in the quarter, to $227 million, while net income fell 8.7%, to $19.9 million. Sales in the higher education group fell 4.8% in the period, to $45.5 million, while sales in the professional/trade segment were flat at $76 million. Sales in the STM group increased 10.8%, to $46.2 million.
The weakness in Wiley's higher education group drew the most attention from analysts. Wiley CEO Will Pesce said the two factors behind the decline were delayed ordering and tighter inventory management by college bookstores, as well as increases in used book sales, parallel imports and textbook sharing. He acknowledged that students' concern over prices most likely continues to drive students to buy used texts, and he said anecdotal evidence suggested that the percentage of used textbooks sales rose in the quarter. The college text market also continues to be affected by the growing use of technology in courses. While the migration of college materials to e-content may help solve the used book problem, Pesce said, college publishers are in for a "bumpy ride" during the transition.
Flat sales in the professional/ trade segment was due in part to a decline in the cooking and business categories that offset gains in the architecture, professional culinary, psychology and education book segments. Revenue in the period included the bulk sale of a customized edition of Guide to New York City Landmarks that was distributed at the Republican National Convention. Also in the quarter, Wiley signed an agreement with MTV to publish an eight-volume series of travel guides aimed at students and co-branded as MTV and Frommer's.
The 11% increase in STM sales was driven by a 12% increase in journal revenue plus a 9% gain in book sales.
In Wiley's international markets, sales in Europe rose 18%, or 12% excluding foreign currency effects. Journal revenue was up in all markets, and book sales also rose, led by sales through online channels. Sales in Asia, Australia and Canada were flat in the quarter (down 2% excluding currency changes) as growth in Asia was offset by sluggish results in Australia and Canada.
