Publishing and the Current Economic Environment

Once a quarter, we compile a list of leading economic indicators that affect our industry and our business. I thought I would start sharing the report here. (Click on the chart below for a larger view. If you want a PDF version of the file that you can print out, click


I think the business environment is analogous to a river’s current. Our performance as a company is analogous to how the boat moves through that current. Sometimes, you move faster than the current, sometimes you row against it, and sometimes you just drift with it.

I think it’s safe to say that we’ve been rowing against the current this year. The economy has been tough.

On the positive side, gas prices in the fourth calendar quarter came down 6.4%. Consumer confidence was up 15.7%, but this sometimes doesn’t affect the quarter in which it is measured. It often represents consumers’ intent going forward. Still, consumer spending rose 5.2% in the fourth quarter and that’s a positive thing. Unfortunately, interest rates rose 18.5% from the same quarter a year ago. That doesn’t help consumers or businesses.

In the retail sector, the top 80 retail chains experienced modest average growth of 2.9%. Wal-Mart was basically flat to last year (a 0.7% rise) and Costco, which caters to a higher-end consumer, saw sales growth of 6.0% for the quarter.

In the book segment of retail, the Association of American Publishers (AAP) reported that book sales for all categories was up by 5.5% for the quarter. These numbers reflect “sell-in” of product from their 82 reporting publishers, including Thomas Nelson. Book sales for just the religion category were down 4.9% for the quarter. (Book sales for the entire 2006 year in the religion category were down 10.2%.)

In terms of retail book sales, none of the six big retailers have yet reported on the December quarter. However, all of them have reported on their holiday sales for the nine weeks ending December 30. was the clear winner, growing a whopping 34% over the same period last year. Traditional brick-and-mortar stores didn’t fair so well. Barnes & Noble reported the best results. Their same-store sales were essentially flat with a slight decline of 0.1%. (This caused one industry insider I heard at a trade show to remark, “flat is the new up.”)

B. Dalton and Walden faired the worst with declines of 7.6% and 6.3% respectively. Obviously, this retail concept isn’t working as well as it once did. Traffic appears to be moving to the superstores and, quite noticeably, to This shift began a few years ago and appears to be accelerating.

Nielsen BookScan measures “sell-through” of books through general market retailers. For the quarter, they reported a slight decline of 0.7%. STATs measures sell-through through Christian specialty retailers. They reported a 10.7% decline.

At best, I think that the environment presents a “mixed bag” of economic indicators. At worst, it’s a challenging—even dangerous—environment. I suspect that a lot of smaller publishers—particularly those with a modest backlist—will struggle to stay in business.

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