Sales at wholesaler Bertrams dropped 3% in the last six months, with library sales down 25%. But strong international sales and a "resilient" retail performance in the face of a slowing consumer book market helped arrest the overall decline.
Results put out today by parent Smiths News showed that the book wholesaler's revenues were £73.5m in the six months to 28th February 2011, down from £75.8m year-on-year. Operating profits were in line with the same period last year at £2.4m, and though its gross profit margin dipped slightly a 15% cut in operating costs held up the bottom line.
The company also revealed it discovered an employee had been fraudulently controlling a customer account worth £1.9m. However, the group expects the amount will be recovered through insurance and the employee responsible has been dismissed.
"While investigations are on-going, at this stage we remain confident the fraud was contained to a single employee and that there is no further financial exposure in relation to this issue," the company said.
The wholesaler, which supplies books to independent retailers, internet companies and libraries, partly blamed the 3% revenue decrease on a 25% reduction in library book sales. However, the company has grown international sales by 28%, most notably in the US, where book sales have grown by 50% and in France, Germany and Scandinavia, where they are up by 25%.
The company's six-month interim report released this morning, said: “Whilst sales of books to retailers have been generally resilient within Bertrams, public sector spending cuts and the uncertainty over public library budgets resulted in the library services division being down 25%, which has distorted a credible performance for the business.”
The wholesaler is owned by Smiths News PLC, also a magazine and newspaper wholesaler, which saw revenue drop by 5.2% to £872.3m, from £919.8m in February 2010. The group made £18.7m profit before tax, up 22.2% from 2010, when it made £15.3m.
Mark Cashmore, group c.e.o, added: "Our operational progress over the last six months has been pleasing. Despite a number of challenges across the group's markets, we have delivered a solid financial performance, increasing our confidence in achieving the full year consensus and underpinning our commitment to a progressive dividend policy."
The company has a bright outlook for Bertram's despite a challenging market. “Bertrams' performance has shown resilience in the context of a softening of the UK books market and the impact of public sector budget cuts. Despite the more challenging market conditions we believe Bertrams' continues to offer opportunities for long term growth,” the report added.