Tough pre-Christmas trading has claimed another victim after Bloomsbury Publishing blamed a swingeing profit warning issued late yesterday evening in part on poor book sales.
The group behind the Harry Potter series also said that delays in selling on the rights to some of its reference titles had contributed to its warning that pre-tax profits could be as much as 75 per cent worse than analysts had expected.
Shares in the company will open sharply lower today because it did not issue its trading update until 6.01pm, well after the stock market had closed. The stock has drifted lower this year, but closed up 2p yesterday at 310p, implying investors had no idea that the group was doing so badly.
In a short statement, the group, run by Nigel Newton, said its pre-tax profit for the year to 31 December "may be in the region of £5m". After a bullish update in September, analysts had believed the group was on track to report profits of around £20m.
Compounding the weak retail market, which has already forced a profit warning from Woolworths, Bloomsbury has not had as many of its titles in the recent bestseller lists as normal. This is despite a prediction from the publisher three months ago that its publishing programme for its second half was among its "strongest to date". The titles it has published include one by Gordon Brown, the Chancellor. Other new titles include those by Jon McGregor, William Boyd and Margaret Atwood.
The warning will destroy confidence that the company, which was founded in 1986, has managed to build up a sustainable business outside its Harry Potter franchise.
Investors have long fretted about how the group will manage when the seventh and final instalment in the boy-wizard series is published next year. Estimates suggest Harry Potter is responsible for about half of Bloomsbury's business.
The company attempted to reassure shareholders that next year would be brighter. It said it expected to have cash of "not less than £20m" at its year end, adding that it remained "confident of a satisfactory outcome for 2007".Reuse content