Penguin to focus on organic growth and high street

Penguin to focus on organic growth and high street

Digital sales have helped to bolster profitability for Penguin in the first six months of 2011, with company chiefs looking for organic growth and a focus on the high street over the second half of the year.

Pearson’s interim half-year results revealed that e-book sales across Penguin worldwide were up by 128%, now representing 14% of global revenues, or £64m. Penguin m.d. Tom Weldon and chairman and c.e.o. John Makinson declined to be specific about Penguin UK's e-book sales figures, but noted other publishers had cited a figure around 6% of total sales. They said: "We are not disagreeing with that." Titles which had sold particularly well as e-books over the period included Michael McIntyre's autobiography Life and Laughing, with 20% of total sales coming from e-books, and similarly, Nicci French's Blue Monday, with digital books also making up 20% of total sales. Weldon also said The Help by Kathryn Stockett had clocked up noticeably strong digital sales.

Meanwhile, Pearson chairman and c.e.o. Marjorie Scardino was reported to have said at the results press conference that sales of digital books are "a better margin product". She said: "People want to buy a whole book, they don't want to buy a chapter or two. Digital books are a better margin product for us...This is just my opinion, but I don't think people are going to read fewer books. We see people buying more books when they buy online, it seems to be an easier thing. I think reading will carry on, I just think they will read differently. That is salutory for us."

Speaking to The Bookseller, both Weldon and Makinson backed new Waterstone’s m.d. James Daunt. Makinson said: “We really need to focus on the high street for a bit.” Weldon added: “In the first half of the year the biggest worry was Waterstone's, so it [the sale] is a massive relief to us.” He then said one of the main objectives of the next six months is to “sit down with James Daunt and work out with him how we can support Waterstone's and his plans”.

Makinson praised the “particularly amazing” performance of Penguin’s Children’s division, and said children’s was a big theme of the year so far, also noting DK’s “extremely good” six months. He said Penguin is relocating a “substantial” part of the DK business to India. He said: “As you see DK growing, you will see more growth in DK India rather than in the UK.” However, he added this would have no impact on staffing levels in the UK.

Looking to the next six months, Makinson said: “We are much more focused on organic growth". Acquiring new businesses was less attractive due not only to cost but also to the higher risk factor as the culture of a business is “so important”, said Makinson. He added: “We have such a broadly based business in London that we are able to expand into any area of consumer publishing.” Weldon said: “I suspect we will start a few new imprints in the next six months.” They said there would not be a devoted digital imprint created, but said some titles may be published either first or exclusively as e-books.

Pearson’s interim half-year results showed Penguin’s global sales were level with the same period in 2010, at £457m. Operating profit showed underlying growth of 13%, reaching £42m. Makinson said: “The past six months have represented a watershed for book publishers and book retailers alike,” adding all in the industry have been presented with “unprecedented challenges”. He told The Bookseller: “We are really confident in the performance of the company and we will continue to invest in people, brands and new technology.”