Improving profits proved to be a tough task for book publishers and booksellers alike in 2004. Operating margins at seven publishers fell in their most recent fiscal years, rising at only six. Margins stayed even at HarperCollins. Borders Group and Books-A-Million managed to raise margins slightly last year, while margins dipped at Barnes & Noble. The most dramatic change in the bottom line occurred at Audible, which swung from a loss to post a 3.2% operating margin in 2004.
Among the educational/professional publishers included by PW, margins fell at four, due largely to a combination of investments to prepare for the 2005 adoption market and sluggish college sales.
Trade houses had a more mixed performance. Random House managed to boost its EBIT (earnings before interest and taxes, and slightly different from operating income) to 7.9%. A decline in sales and operating problems in its U.K. warehouse dropped margins at the Penguin Group last year. And the most profitable publisher of all, Harlequin, took a hit as sales declined and expenses rose.
Operating Performance of Selected Publishing
Industry Companies, 2003—2004 ($ in Millions)
| 2004 Operating Data | ||||
| Revenue | Op.Income | Margin | '03 Margin | |
| Audible | $33.8 | $1.1 | 3.2% | — |
| Barnes & Noble | 4,873.6 | 244.2 | 5.0 | 5.2 |
| Borders Group | 3,879.5 | 216.7 | 5.6 | 5.4 |
| Books-A-Million | 475.2 | 18.2 | 3.8 | 3.3 |
| Dover*¹ | 40.8 | 6.4 | 15.6 | 15.9 |
| EDC | 31.6 | 3.9 | 12.3 | 12.2 |
| Harcourt* | £868.0 | £164.0 | 18.9 | 19.4 |
| Harlequin* | C$538.4 | C$97.2 | 18.0 | 21.2 |
| HarperCollins*² | 1,327.0 | 164.0 | 12.4 | 12.4 |
| Houghton Mifflin | 1,282.8 | 16.7 | 1.3 | 3.9 |
| McGraw-Hill Ed.* | 2,395.5 | 340.0 | 14.2 | 13.7 |
| Pearson Education* | 2,356.0 | 293.0 | 12.4 | 12.7 |
| Penguin* | 786.0 | 54.0 | 6.9 | 10.8 |
| Random House* | 1,777.0 | 140.0 | 7.9 | 6.5 |
| Thomson Learning* | 2,174.0 | 327.0 | 15.0 | 16.4 |
| Scholastic³ | 2,079.9 | 134.9 | 6.5 | 5.4 |
| Thomas Nelson4 | 204.4 | 28.4 | 13.9 | 12.8 |
| John Wiley5 | 974.0 | 141.4 | 14.5 | 14.0 |
| (1) For fiscal years ended Sept. 30, 2003, 2004. | ||||
| (2) For fiscal years ended June. 30, 2004, 2005. | ||||
| (3) For fiscal years ended May. 31, 2004, 2005. | ||||
| *Denotes companies where corporate expenses have not been deducted from operating income. | ||||
| (4) For fiscal years ended March. 31, 2003, 2004. | ||||
| (5) For fiscal years ended April. 30, 2004, 2005. | ||||
