For 2022, major publishers saw flat book sales

A fall in profits at Penguin Random House, Lagardère Publishing, and HarperCollins in 2022 compared to 2021 was caused by rising costs and sluggish demand, affecting three of the four leading publishers that reported their financial results. With a 16.4% increase in earnings on an 18.5% increase in sales, Simon & Schuster was the only publisher to buck the trend.

Executives at the three publishers whose earnings decreased cited similar causes for the fall, including more significant expenses across all aspects of the business due to inflation and persistent supply chain problems, as well as reducing demand after two years of pandemic-fueled surges. Long sections of 2022 saw a significant decline in book orders due to the slowdown in sales, leaving Amazon with much-unsold inventory, including books.

One of the leading causes of HC CEO Brian Murray’s company’s challenging year, which included a considerable fall in orders from Amazon and a sharp decline in sales and earnings in the second half, leading to a 4.6% decline in revenue and a 36.2% decline in profits, was a significant decline in orders. HC began undertaking a 5% decrease in its North American staff in January due to a reduction in its financial performance and an unreliable outlook for 2023. By the end of June, the cuts that parent firm News Corp demanded will have been implemented throughout all its businesses.

PRH saw an increase in sales for the year of 4.8%, reaching €4.22 billion (or $4.6 billion at the current currency rate), but EBIT (profits before interest and taxes) decreased to €666 million. 57% of all PRH sales were made in the U.S. According to parent firm Bertelsmann, the publishing industry in the United States “reflected the normalization of demand following the strong sales of the pandemic years, as well as the challenges posed by inflation and supply-chain pressures.” Although he conceded that PRH “fell short of our collective targets,” Nihar Malaviya, who succeeded Markus Dohle as temporary global CEO at the beginning of the year, characterized the results as a “mixed performance.”

The main business of the Hachette Book Group, Lagardère Publishing, reported revenue of €2.75 billion ($2.94 billion) in 2022, an increase of 5.8% over 2021, but losses of €302 million. The company credited acquisitions, including an entire year’s worth of sales from Workman Publishing (which was acquired by Hachette Book Group in September 2021) and an €87 million gain from exchange rates for the boost in revenue.

The broader publishing group’s financial results were mirrored by HBG’s. According to CEO Michael Pietsch, excluding Workman statistics, total revenues “were down slightly” from their peak in 2021 and were up over that year due to the Workman acquisition. He continued, “Sharply rising manufacturing and freight costs” was the cause of the decline in profits.

S&S couldn’t escape the burden of rising prices, despite its outstanding performance in 2022. The second half of 2022 showed a decline in performance after the first half of the year had a 26% increase in sales and a 64% increase in earnings. Despite this, the 18.5% growth in sales brought S&S’s total revenue above $1 billion for the first time since it separated from other trade publishers.

According to CEO Jonathan Karp, all of S&S’s working groups saw increased revenue, with audio seeing the highest gains. Additionally, the company benefited from publishing most mega-bestselling author Colleen Hoover’s books. Karp was especially pleased with S&S’s overseas division’s performance, which saw sales increase across the board, with Simon & Schuster UK seeing the most significant increase of 21%.

When given the option to forecast how S&S will do in 2023, Karp declined, noting that given the uncertainties surrounding the economy and the identity of S&S’s prospective owner, he would instead “enjoy the moment, and I think I speak on behalf of everyone at Simon & Schuster.” Executives from Lagardère were the only ones to make a prediction, stating that they anticipate a flat year for sales and profits.

The most that any CEO could say regarding the outlook for 2023 is that they anticipate sales to continue to be above pre-pandemic levels. According to Circana BookScan data, unit sales in 2022 increased by 12% over those in 2019, and until the first quarter of 2023, they were roughly flat compared to the previous year.