Harper Collins: On the Road to Recovery?

So, let’s talk about HarperCollins, shall we? The publishing giant, under the helm of CEO Brian Murray, had a bit of a rough patch, to put it mildly. But guess what? Things are looking up. Publisher’s Weekly is reporting the fiscal first quarter brought in sales of $525 million. That’s a nice bump up from last year’s $487 million, though it’s still playing catch-up to 2021’s $546 million.

Now, here’s where it gets interesting. Margins are making a comeback too. EBITDA hit $65 million, up from last year’s $39 million, but not quite at 2021’s $85 million level yet. The company’s pointing to lower manufacturing costs and less headache with freight and distribution as big helpers here. Of course, they’re balancing this with higher employee costs.

Adjust those sales figures a bit, and you’ll see acquisitions added a neat $4 million in sales, with foreign exchange chipping in another $7 million. Not too shabby, right?

The real kicker? Physical book sales are on the rise again in the US. This boost comes after Amazon’s inventory reset and warehouse adjustments last year. Brian Murray, a few months back, was really hoping for a turnaround after a longer-than-expected struggle with inventory issues. Looks like his wish is coming true.

Over at News Corp., CEO Robert Thomson had some insights to share on their investor call. The Amazon logistics chaos? A thing of the past. Return rates? Way down. And both new releases and older titles are doing better. Thomson noted that sales growth, coupled with cost-cutting and an easing supply chain, is reshaping HarperCollins’ performance. Frontlist sales now make up 39% of revenues, compared to 35% a year ago.

Thomson had some high praise for their Christian books business, including Reba McEntire’s “Not That Fancy.” And get this – they’ve got a new partnership with Spotify to expand the reach of audiobooks. Thomson’s pretty stoked about this, believing it’s a win-win for everyone – authors, book lovers, Spotify, and HarperCollins.

During the Q&A, Thomson dished out more details about the Spotify deal, hinting at a model beneficial for all parties. Early signs from the UK and Australian markets? Looking good.

CFO Susan Panuccio, while optimistic, cautioned that the earnings improvement might be moderate. They’re hoping to maintain EBITDA margin positivity and aim for low double digits for the full year. It seems like they’re playing the long game, eyeing a steady margin increase over time.

So, what’s the takeaway? HarperCollins might just be bouncing back. It’s a story of resilience, smart partnerships, and maybe a dash of luck. Let’s see how this chapter unfolds, shall we? 

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Tina Pavlik

Owner of TRS since 2003

An aficionado of romance novels for many years, Tina has owned The Romance Studio since 2003 and for 20 years, has enjoyed highlighting the best books in the genre. She enjoys all aspects of marketing including writing content, book trailer design, and finding captivating new books for voracious readers. She has also written over 20 romance titles under various pen names. In another life, she writes horror and works as an extras casting assistant for TV shows and films in the North Carolina and South Carolina regions.