The Reader’s Digest Association reported third quarter 2002 net income of $16.4 million, down from $27.9 million one year ago. Its revenue fell from $597.9 million to $541.8 million.
The company’s North America Books and Home Entertainment segment was hit hard during the quarter. Its operating profit dropped from $12.7 million to $800,000, and its revenue slipped from $171.4 million to $146.8 million. The quarter ended March 31.
The segment is undergoing substantial restructuring. Plans included cutting 100 positions–all at the Pleasantville, NY headquarters–and trimming mail promotion volume by 40% to eliminate “direct mail campaigns that are not generating acceptable contributing profits,” the company said last week. The company employs 5,000 people.
Reader’s Digest’s International Business unit saw its operating income drop from $22.4 million to $12.1 million. It reported revenue of $242.2 million, down from $264.3 million last year. The company had shifted some of its mailings, aimed at consumers in France, Germany, Australia and Poland, to fourth quarter 2002 resulting in lower revenue.
Its U.S. Magazine division generated $131.6 million in revenue, down from $149.3 million, while its operating income dropped by half, from $11 million to $5.5 million. In early March the company announced that it would end publication of New Choices, a magazine geared toward the senior market. The company attributed the magazine’s demise to the effects of Sept. 11, the end of sweepstakes-sold subscriptions, and a downturn in the advertising market.
New Business Development had operating income of $3 million, compared with a loss of $6 million in third quarter 2001. Its revenue was up from $13 million to $21 million. The division trimmed operating losses from its Gift.com business, which it plans to divest.
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