Citing a flood of critical acclaim for its books and compact discs, Dorling Kindersley insisted yesterday its 23-year success story would continue, but it admitted that problems in the United States had pushed it off track after years of rapid growth.
Echoes of previous high-flyers such as Sock Shop that crashed to earth in the US have sent investors in the company rushing for the exit and Dorling Kindersley joins a long list of stars over here that have failed to shine over there.
Peter Kindersley, the company's multi-millionaire founder, remained defiantly positive yesterday despite causing consternation in the City with a warning that American profits, which have driven the company's dramatic recent growth, were flagging.
Shrugging off a fall of almost pounds 100m in his family's private fortune over the past year, thanks to a collapse in the value of its shares in DK, Mr Kindersley painted a bright future in which the flow of middle- class favourites such as The Royal Horticultural Society's Plant Encyclopedia and this year's star launch, an interactive children's CD-Rom encyclopaedia, will continue unabated.
Dorling Kindersley, which despite becoming one of Britain's biggest companies still operates from a collection of elegant town houses in Covent Garden, central London, proved yesterday it is better at pleasing children than the City's unsentimental fund managers. Its shares which cost 645p a year ago were worth only 270p yesterday after the company told investors for the second time in three months that its profits would be worse than expected.
But the company insisted its problems were one-off blips and nothing to do with its products which remain popular. It blamed the soaring pound for reducing the value of its overseas profits and an upheaval among US booksellers which has seen giant chains like Barnes & Noble reducing their stocks of books and CD-Roms to try and stem heavy losses.
Founded in 1974 by Peter Kindersley and his partner Christopher Dorling, DK began by creating high-quality practical reference books, almost exclusively for adults. From the outset, the company's books stood out from their rivals by focusing on elegantly presented images at the expense of text and immediate public acclaim made a handful of titles in the 1970s million- copy best-sellers.
DK's most successful book to date, the Family Medical Guide, has sold more than 6 million copies in 15 languages and visits to cities around the world have become almost unthinkable for many travellers without a well-thumbed copy of the relevant Eyewitness Guide. The series, which now runs to 56 titles, has sold 18 million copies in 39 languages.
In 1987, Dorling moved into children's books and for 10 years has made learning a pleasure for thousands of absorbed children and their relieved (if considerably poorer) parents. From The Ultimate Dinosaur Sticker Book to PB Bear's Birthday Party, DK has in effect cornered a hugely lucrative market.
But the real excitement, according to Mr Kindersley, lies in what he describes as "the digital future". For a man who has made a fortune out of the printed word he exudes enthusiasm for the interactive PC world in which his books' images spring to life. After three years of development, DK will this year launch its latest 3D Children's Encyclopedia, whose half a billion words, maps, pictures, video clips and music are expected to astonish any parent able to get near the family computer.
Alan Buckingham, who heads DK's multi-media operation, believes the CD- Rom market is set to explode in the next few years. In 1994, he says, there were around 12 million personal computers with CD-Rom drives, three- quarters of them in America. By2000 there will be an estimated 97 million.
Peter Kindersley dismisses recent problems in America as a distraction from long-term trends that will ensure the DK phenomenon continues unchecked.
He said: "Who would have thought the Learning Channel would be the fastest- growing cable channel in the US, or that the Discovery Channel would be sold in 122 markets. Globally more and more people are rediscovering learning and that being a self- educator can bring great benefits."
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