The Reader's Digest Association, Pleasantville, NY, had fiscal 1999 revenue of $2.532 billion, down 6% from $2.691 billion in fiscal 1998. Net income rose 50%, from $68.7 million to $167 million, largely as a result of strategic initiatives to significantly reduce unprofitable promotional mailings, eliminate unprofitable activities and re-engineer business processes.
The fiscal year ended June 30.
In order to cut expenses and maximize net income, the company:
Significantly reduced the number of promotional mailings globally, including eliminating related product development and overhead costs to improve response rates and profitability;
Reduced the circulation rate base for Reader's Digest magazine in the United States and in most international markets to improve the efficiency of promotional spending;
Eliminated or redirected certain product lines in selected markets;
Sold operations in South Africa and closed operations in Chile, Colombia and Peru;
Consolidated operations in Benelux, the Nordic countries, Germany and Switzerland, and the Czech Republic and Hungary;
Outsourced support functions in areas where cost-effective; and
Consolidated suppliers and redesigned purchasing efforts for greater negotiating leverage.
