Book manufacturer and specialty publisher Courier (NASDAQ:CRRC) reported that earnings for the first quarter of fiscal 2007 were more like a softcover edition. Sales, while up 11% over last year, fell below analyst expectations because of a slowdown in demand for textbooks and a "lackluster start" to holiday sales at retail chains.
Courier's manufacturing segment experienced slight year-over-year growth, while there was a 53% increase in sales in the specialty segment. But because manufacturing accounts for about 80% of revenues, the numbers in specialty publishing weren't enough to spur total sales.
The slow start to fall textbook sales particularly affected manufacturing, though the company says that things picked up as the quarter wore on, particularly in the elementary and high school markets. That should bode well for Courier, which recently installed new four-color presses at one facility, an important feature for textbooks, whose sales are entering peak season.
In specialty publishing, it was a mixed bag. While Courier's new Creative Homeowner acquisition helped spark 53% growth in the segment, sales dropped 13% for Dover Publications, its niche trade division, though retailer inventories were supposedly brisk. This may be a precursor to future sales to replenish stock. In the test prep division, sales rose 17% for the quarter. As high school students prepare for their SATs, we should see strong second-quarter sales as well.
Courier's results were not much different from those of other publishers. When Scholastic (NASDAQ:SCHL) reported its second-quarter earnings back in December, it also suffered from slack demand for its products in the educational division, but because its mass media division publishes the Harry Potter titles, it was able to post record results. In November, Educational Development (NASDAQ:EDUC) reported that its sales to schools and libraries fell 40%.
This says to me that the issue is industrywide -- perhaps involving timing -- rather than a problem with Courier's business. With the textbook season beginning in earnest, and test-prep and specialty titles already strong, Courier had good reason to affirm its earnings projections for the year.
Courier has yet to earn a rating at Motley Fool CAPS. You can add your voice to the Foolish stock rating service by clicking here.
Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
