Bloomsbury shares dive after publisher reports declining profits

Importance Score: 30 / 100 🔵

Bloomsbury Publishing experienced a significant downturn as its shares plummeted following the announcement of reduced yearly profits, despite an increase in overall revenue. The book publisher’s annual pre-tax profits witnessed a 22% contraction, settling at £32.5 million.

Bloomsbury Shares Tumble After Profit Announcement

Shares in the company underwent a steep decline, dropping by 16% to 547p in early afternoon trading. This made Bloomsbury the weakest performer on the FTSE 250 by a considerable margin.

Profit Decline in Consumer Division

The well-known publisher, famous for titles like Harry Potter and the Sarah J. Maas series, disclosed that its pre-tax earnings had shrunk by 22%, arriving at £32.5 million for the fiscal year concluding on February 28.

Profitability within its consumer division diminished to £31 million. This represents a fall from the preceding 12 months when profits had more than doubled to £37.4 million, fueled by a surge in the popularity of Sarah J. Maas’ works.

Revenue Boosted by Acquisition

Despite profit challenges, Bloomsbury’s total revenue saw a 5% increase, reaching £361 million. This growth was largely attributable to the purchase of academic publisher Rowman & Littlefield, which contributed £19.8 million in sales throughout the year.

Nigel Newton, Bloomsbury’s founder and chief executive, called the £65 million acquisition a “game-changer.” The acquisition marked the largest in the company’s history.

Challenges in Higher Education Markets

The Rowman & Littlefield acquisition has been pivotal in mitigating financial strain resulting from budgetary issues in the UK and US higher education sectors.

Several British universities are facing financial shortfalls due to increases in National Insurance contributions and a decrease in international student enrollment after new restrictions were imposed on bringing dependents. Simultaneously, American colleges are grappling with dropping enrollment numbers, partly due to decreasing birth rates.

Impact on Academic Revenues

Coupled with declining sales of printed academic books because of the ongoing shift towards digital learning platforms, Bloomsbury’s academic and professional organic revenues declined by 10% in the most recent fiscal year.

Strategic Shift to Asia

Faced with sluggish trade within the UK and US markets, Bloomsbury is strategically refocusing its efforts toward Asia.

• The publisher will open an office in Singapore before the end of the year.
• The goal of the expansion is to capitalize on the continent’s expanding student demographic.

The World Bank estimates that the population of higher education students worldwide will reach 600 million by 2040, with over 60% of those students residing in Asia.

Newton stated that a focus on Asia will position Bloomsbury advantageously, “geographically and structurally, to benefit from student growth alongside the continued shift to digital learning.”

Financial Outlook

He also indicated that the company anticipates trading for the 2026 fiscal year to be in line with consensus forecasts, with a turnover of £349.2 million and pre-tax profits rising to £45.1 million.

Upcoming Book Releases

Forthcoming Bloomsbury publications include Sally Smith’s crime novel “A Case of Life and Limb,” Paul Hollywood’s “Celebrate: Joyful Baking All Year Round,” and the paperback edition of Gillian Anderson’s “Want.”

Newton concluded, “The resilience of demand for Bloomsbury titles and the excellent sales of our digital products demonstrate the strength of our long-term growth strategy, the publishing judgement of our editors, the reach of our sales and marketing and value of our content.”