Penguin faces challenges of '09

Nicholas Clee
News - Publishing 03 Mar 2009

Penguin is facing 2009 in good spirits about the health of its business, in spite of challenging market conditions, John Makinson and Peter Field (Chairman and CEO, and UK CEO, respectively) have told BookBrunch. Yesterday, the Group announced , with worldwide sales and profits both up. 'If the market conditions were the same in '09 as in '08, I would expect our sales to increase,' Field said. He described the publishing programme for this year as very strong, and said that Penguin had held its own in 2008 in spite of receiving only minimal help from outside factors: only one Richard & Judy selection, no big prize wins, and no windfall sales such as Little,Brown enjoyed with Stephenie Meyer. As conditions stand, Penguin worldwide is forecasting 'flat' sales for the year.

Makinson felt that he should not comment on whether Penguin had suffered less than its rivals from the collapse of distributor EUK, but pointed out that the publisher was less exposed than others to third-party sales arrangements. (HarperCollins took a reported hit of $6m - a figure that might have prevented Penguin from reaching its margin target of 10%.) Penguin had reacted early to the signs of distress at EUK once the distributor's owner Woolworths went into administration, and had made provisions for the possible demise of the company. Field said that the UK trade was still 'working through' the reopening of channels to mass market outlets that EUK had supplied, but hoped that service as before would resume by April. He added that he was impressed with the initiatives for 2009 of high street booksellers.
Dorling Kindersley and Travel publishing were among the most challenging areas of the business, Makinson acknowledged. 'Reordering is quite slow, and consumer demand in some areas is weaker.' However, the Brady Games business did well, and digital licensing and contract publishing offered opportunities for growth. DK in Delhi now employs nearly 200 people to work on its digital content.
Cost-cutting had won for Penguin a percentage point of margin each year since 2005, Makinson said. The focus on operational efficiency would continue.
A particular focus of the Penguin general list will be crime publishing, an area in which the publisher had slipped for a few years. Penguin has managed to raise its market share in the genre again, according to recent BookScan figures, to 8.1%, and plans further growth.

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