Sales Slipped, Profits Rose in 2016 at S&S

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Simon & Schuster finished 2016 with a small drop in revenue compared to 2015 but with a modest increase in earnings, parent company CBS reported. Revenue for the year was $767 million, down 1.8% from 2015 sales of $780 million. Operating income increased 4.4%, to $119 million.

The revenue decline was due in part to a soft fourth quarter in which sales dropped 10.3%, to $209 million, but earnings increased 5.8%, to $36 million. The sales drop in the quarter was attributed to difficult comparisons to the last quarter of 2015, when Stephen King’s The Bazaar of Bad Dreams was a big bestseller.

The increase in profits coupled with the drop in revenue resulted in a 15.5% operating margin, up from 14.6% in 2015.

S&S CEO Carolyn Reidy said that given the overall flat market, "a 2% dip [in sales] is pretty good." She noted that in order to get meaningful revenue growth under today's market conditions, publishers need to either "add a new business or take market share away" from competitors. In late November, S&S bought Adams Media, but given the short time it was part of S&S it did not make a significant contribution to S&S's top line last year, Reidy said. She added that S&S continues to look for possible new acquisitions, but said S&S is "particular" about the type of company it is looking to buy. As for taking away market share, she noted that S&S faces some tough competitors and said the only way to be successful "is to have the best titles consumers want to buy."

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S&S's strongest performing division in 2016 was audio, which benefited from another year of double-digit growth in digital audio, Reidy said. The increase in sales in digital audio helped to offset some of the decline in e-books, but total digital sales lost one percentage point in terms of its overall contribution to company revenues. The children's and international divisions had good years, but sales in the adult group were down.

Reidy credited the improved bottom line in part to continued efficiencies S&S has been able to generate through the implementation of new technology across the company. Asked if there are more efficencies to be found, Reidy said, "we won't stop looking."

Reidy said she was "pretty excited" about prospects for 2017. S&S has a number of new books set for the first half of 2017 by authors who were bestsellers last year. Those include Beartown by Fredrik Backman, whose A Man Called Ove was one of the biggest surprise standouts last year. Mary Higgins Clark will be back with All by Myself, Alone, while the company will release the trade paperback edition of All the Light We Cannot See by Anthony Doer in April. S&S will release the first two titles in its Salaam Reads imprint in March. In the second half of 2017, S&S will publish two new books by Hillary Clinton.

And June will bring the release of Dangerous by the polarizing figure Milo Yiannopolous. S&S's Threshold Editions has not released details on how the book will be published.

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