Major Book Industry News for July 2023

In this article you’ll find an overview of what was going on in the book industry in July – financial news, acquisitions, partnerships, how one person can be a prince and a king at the same time and more.

Publishing Industry Revenue Stable in May

In May, the sales of the publishing industry remained steady year-over-year, which is good news compared to 7.6% decline in April. In no small part this was achieved due to 15.3% fewer returns than in May 2022.

The biggest decline was in the children’s/YA segment, which fell by 14.1%. The sales of religious and professional books fell by 7.8% and 8.4%.

Higher education course materials sales increased by 11.3%, revenue of university press titles grew by 7.4%. Adult books generated 5.7% more revenue.

The publishing industry’s bacon was saved by digital audio revenue, which grew again, this time by 16.9%. At this rate the publishing industry will become the recording industry pretty soon.

Bookstore Sales Grew in May

Bookstore sales grew by 6% year-over-year in May, from $613 million to $650 million. This was a significant improvement compared to 0.9% decline in April.

Overall, the bookstore revenue went up by 8.3% in January-May 2023 year-over-year, to $3.30 billion (from $3.05 billion).

Bookstore Sales

Tough Times for Barnes & Noble Education

Despite the fact that B&NE revenue grew by 3.2% to $1.54 billion in fiscal 2023, the company amassed the net loss of $90.1 million, up from $61.6 million in the previous fiscal year.

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B&NE sold its Student Brands and Bartleby products for $20 million to decrease its debt. The company has been optimizing its finances for some time, however this hasn’t delivered the desired outcome yet.

On July 14 B&NE submitted a filing with the Security & Exchange Commission, saying it was negotiating with third parties “to evaluate a range of options to strengthen its liquidity and financial position”. If these negotiations fail, most likely, the company will be in serious trouble.

B&NE’s share price dropped by 20%, to $1.27 on July 17, when the information about the filing became public.

On July 28 B&NE announced that it had reached an agreement with financial stakeholders and strategic partners to rework a number of agreements, which would provide the company with more financial flexibility and enable it to continue operating. The company shares went up 17% following the announcement.

Under the agreement, B&NE is required to establish a committee of the company’s board of directors to examine strategic alternatives. These alternatives may encompass the potential sale of the entire company or specific assets, as well as pursuing options such as obtaining additional capital and developing strategies to expand the business.

Hachette Book Group Shows Mixed Results in January-June 2023

In the first half of 2023, Lagardère Publishing revenue grew by 2.5% compared to the first half 2022, up to to €1.25 billion. At the same time EBIT decreased by 16%, to €65 million. The decline in profits happened due to higher costs and one-time charges, one of which was spent on the integration of Workman Publishing and reached €10 million.

Weak U.S. sales (down 8.6%) were compensated by solid performance in France (up 7%, thanks to stronger publishing schedule),  U.K. (plus 7.3%, due to adult trade segment) and Spain/Latin America (plus impressive 26.1%, education segment).

Hachette Book Group CEO Michael Pietsch said that the company expects “a considerably stronger second half”. He forecasted that HBG’s adult fiction segment, the Moon Travel and Rick Steves travel books would continue to grow. Michael Pietsch also had high hopes for “Tik Tok-promoted nonfiction and fiction”.

Book Fairs Propel Scholastic

Scholastic reported a good fiscal year of 2023, which ended on May 31, 2023. Revenue increased by 4% year-over-year, up to $1.70 billion. Accordingly, operating income grew by 9%, to $106.3 million. The fourth quarter was the most successful, with operating income up 40% on a 3% revenue growth.

The major driver of the growth was Scholastic’s book fair business, which increased its revenue by an impressive 29%, up to $553.1 million.

Thanks to the solid book fair performance, the company was able to overcome declines in trade sales (minus 6%), educational solutions group (2% down) and other divisions.

As of June 1, Scholastic has joined its fair and club businesses into an integrated school reading event group. The publisher believes this move will have a positive effect on both sales and profits.

Scholastic predicts the revenue to grow by another 3-5% in fiscal 2024, hoping the number of book fairs to reach approximately 90% of pre-pandemic levels (85% in 2023).

According to Scholastic CEO Peter Warwick, the company is employing AI to “more efficiently serve our customers with generative Al, for example, by integrating it into customer service and marketing processes”.

KKR is selling RBmedia for $1+ Billion

RBmedia is the leading audiobook publisher in the world, which took its current shape after a series of acquisitions and divestitures. For example, in 2022 it purchased ABOD and John Verlag and Editions Theleme. In 2021 is sold Audiobooks.com. Currently it has over 66,000 titles in its collection and demonstrated double-digit revenue growth during the last five years.

KKR sells RBmedia to an affiliate of H.I.G., a leading global alternative investment firm. KKR bought RBmedia in 2018 for an alleged $500 million and now is selling it for more than $1 billion.

Once the deal is finalized, all RBmedia employees will get a cash payout of up to two times their annual salary, depending on how long they’ve been with the company.

KKR is one of the potential buyers of Simon & Schuster. Being a big shot in the investment world, KKR has enough cash to purchase the Big Five publisher, however, they definitely could do with adding another billion to the war chest.

Turner Publishing Acquired Three Imprints

Turner Publishing bought Conari Press, Bonhomie Press, and Woo! Jr. imprints from Mango Publishing. Within the acquisition, 589 Mango titles have been transferred to Turner. Many of the titles belong to the self-help and inspirational categories.

Todd Bottorff, president and publisher at Turner, said that Mango “has curated an excellent collection of beautifully written and award-winning books. We are honored to carry on publishing these titles”.

The sale of the imprints will enable Mango Publishing to focus on specialized nonfiction titles. Ingram Publisher Services distributes books for both Turner and Mango, so the distribution for the imprints will remain the same.

Lost Jobs at Penguin Random House

The buyouts and layoffs and part of the larger restructuring process at Penguin Random House, which earlier this year reorganized its Random House and Crown units.

Penguin Random House is parting ways with several of its most esteemed and long-standing editors, who have opted to depart after accepting buyout offers. Vicky Wilson, Jonathan Segal and Ann Close are among the leaving editors. The total number of buyouts and layoffs is yet unknown.

“All of us at Penguin Random House greatly respect the life-changing decisions of those U.S. colleagues who have chosen to take the recent company-wide Voluntary Separation Offer”, says the Penguin Random House statement provided to The Associated Press.

“Their contributions to our publishing, our booksellers, and to our readers have made a meaningful difference in who we are as a company and community, and their dedication to mentoring and to sharing their expertise and experience with our next generation of talent will be one of their major legacies. We thank them and wish them a joyful and fulfilling next chapter”.

Penguin Random House is not alone when it comes to buyouts. HarperCollins and Hachette Book Group did the same recently.

Penguin Random House

Did Anyone Get a New Job?

Fortunately, yes. Brad Dempsey was appointed as interim CEO of Tattered Cover. The Tattered Cover has seven stores in and around the metro area and Colorado Springs listed on its website.

Dempsey is a lawyer specialized in finance and restructuring, and will focus on “addressing the company’s immediate financial challenges, improving the selection of books and gifts in stores, enhancing the customer experience, and fostering relationships with both Tattered Cover’s devoted customers and new customers”.

“There’s still a very viable business model for the independent bookstore”, Dempsey said. “There’s still margin and ROI, for all the people who are into that – which, you know, investors are”.

Simon & Schuster Partners with Likewise

Since 2018, Likewise has been aggregating a large community of readers, who use the platform to discover, catalog and share their favorite books. Its AI-based algorithm takes advantage of more than 450 million recommendations to help readers find interesting books.

“We are excited to extend our collaboration, find and create new fans, and bring new books and genres to engaged readers”, said Liz Perl, S&S executive v-p and chief marketing officer.

According to lan Morris, co-founder and CEO of Likewise, “Readers have been central to the Likewise community from the very beginning. Extending our partnership with Simon & Schuster and the expansive range of authors and titles they represent is an exciting opportunity to create even more of the custom content, lively discussions, and personalized book recommendations for their readers and our vibrant community”.

Within the partnership, Likewise received access to Simon & Schuster’s huge catalog of book-related content. Likewise will promote the content in its entertainment newsletters, mobile and TV apps, via social media accounts and website.

Likewise claims that “the average Likewise user reads 3.5 books per month and nearly half have purchased a book they saw on Likewise”. Does this mean Simon & Schuster will have another record quarter?

U.S. Publishers Worried about New Amazon’s European Sourcing Policies

Until recently, Amazon used to import books from American publishers and distributors to complete orders, placed in Europe. In pursuit of its sustainability goals, the ecommerce giant is mandating that U.S. publishers supply their books from Europe.

As per Amazon spokesperson, the company had informed publishers about the upcoming policy changes 18 months in advance.

Publishers reckon that the changes will lead to increased costs and supply chain and stock management problems. On top of that, Amazon Europe has been ordering more and more from U.K. publishers, which leads to fewer orders from U.S. businesses. Due to this U.S. publishers could lose up to 50% of the revenue they’d received via Amazon Europe.

Prince is the King of 2023 Book Bestseller List

Prince Harry, the Duke of Sussex, may have low chances to occupy the British throne, but it’s a different story when it comes to the book bestseller list. His Spare, with almost 1.2 million copies bought, became the best-selling book of the first half of 2023.

With an incredible seven titles in the top 20 list and 4 million in combined sales, Colleen Hoover is probably the only writer who isn’t jealous of the prince’s success.

James Clear (Atomic Habits), Bonnie Garmus (Lessons in Chemistry), Taylor Jenkins Reid (The Seven Husbands of Evelyn Hugo), and Emily Henry (Happy Place) also made it to the top-10.

Social media recommendations, Tiktok in particular, played an important role in shaping up the bestseller list.

Conclusion

As you can see, despite summer and vacation time, not everyone in the publishing industry went to the beach, and some quite major moves took place. Thank you for reading till the end and see you in my new articles!

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