Life after Larsson: Lenders fret as publisher's sales tumble

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The Independent Online

Quercus shares lost as much as half of their value yesterday as the independent books publisher warned of a "significant trading loss" because of poor sales at Christmas, particularly now that its hit series, starting with The Girl with the Dragon Tattoo, is on the wane.

Investors were shocked as Quercus previously reported a £500,000 profit in the first half of last year and it looks now as though it will swing to a seven-figure annual loss.

In a sign of a financial squeeze, Quercus is "in constructive discussions" with its bankers at Barclays regarding the terms of its loans. It said it would update investors with a progress report soon.

The publisher had £300,000 in cash when it last reported results. Quercus blamed "challenging" conditions in the books trade as stores had "very conservative ordering policies" and it warned that growth in e-books had been "lower than expected", a trend that has been seen elsewhere in the industry.

Colin Adams, the chief financial officer, admitted: "Generally across the board the title performance was disappointing." The results were in stark contrast to those of the Harry Potter publisher Bloomsbury, which said that trading had been "very good" as turnover soared 20 per cent over the past four months. Quercus, founded in 2004, has seen its fortunes rise and fall on the strength of Stieg Larsson's Millennium trilogy, which peaked in 2010 when the share price topped 150p. Analysts at the investment bank Northland Capital Partners expressed the concerns of many when they reported: "The weak trading, as well as the investment programme, has placed further pressure on the balance sheet and hence the discussions with its bankers."

It added that, although Quercus had been diversifying its business away from the Millennium series and there was some encouragement from the US, it remained heavily dependent on individual bestsellers and had yet to build up a list of consistent and reliable performers compared with rivals such as Bloomsbury.

Quercus announced last month that it was buying the global English language rights to a new book in the Larsson Millennium series set to be published next year. It said the deal would extend its revenues from the detective books for years to come, but analysts remain concerned about the company's troubles in building up alternative franchises.

The company's shares fell 21.5p to 53.5p – a fall of 43 per cent to its lowest value in nearly four years.