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'The storm clouds are gathering'

17 November 2008

'More Armageddon or Christmas is coming?' The book trade was anxious but not yet showing signs of the downturn. That was what we reported just a month ago in News Review 13 October. Now the storm clouds are gathering faster as the big western economies slip into recession. There are still big hopes for Christmas, but everyone seems agreed that next year is going to be very difficult.

The American book trade may be suffering especially badly. Publisher and CEO of Simon & Schuster Carolyn Reidy says all major accounts have reported that in-store: 'Traffic is down, and what traffic is in there seems to by buying the tried and true.... They're not buying the second book. The brands and name authors that are landing are selling.' She notes: 'Backlist is where we are seeing the drop-off and that is worrisome, obviously, because it is a very profitable part of our list.' S & S is having its own problems, as it is part of CBS, whose biggest shareholder Sumner Redstone needs to raise a lot of cash.

Chairman of giant book chain Barnes & Noble, Len Riggio, said recently: 'Never in all of the years I've been in business have I seen a worse outlook for the economy. And never in all my years as a bookseller have I seen a retail climate as poor as the one we are in. Nothing even close. We are bracing for a terrible holiday season, and expect the trend to continue well into 2009, and perhaps beyond.' He noted however that Barnes & Noble had a solid balance sheet and was debt-free, which means that it is strongly placed to sit out the recession.

Big international romance publisher Harlequin/Mills and Boon says that their sales are holding steady. However health publisher Rodale has just announced that it is cutting 10% of staff, citing its difficulties in finding a strategic partner to help it expand because of weakness in the credit markets. HarperCollins's worldwide sales for the quarter are 4.5% lower than a year ago.

In the UK things don't look so bad, although nervousness is gripping the trade. W H Smith has said it has seen a 4% drop in sales in its high street stores in the last 10 weeks. Nielsen, looking at the market as a whole, says that sales are down on last year.

Simon Juden, CEO of the UK Publishers' Association, says: 'Historically, we have always done all right in tough times. I don't think anyone is expecting major growth - but equally I don't think we will see anything catastrophic. The fundamentals are strong and the sector will do well.'

As regards Christmas, his view is supported by the latest report from Deloitte, which has struck an optimistic note in noting that books are growing in popularity on consumers' must-have Christmas lists. Its annual Christmas Retail Survey reported that 59% of UK consumers said they intended to spend the same amount of money as last year. 63% of those surveyed said they would buy books this Christmas, up from 55% last year. Another 65% said they were hoping to receive something to read this year. These are very positive numbers, so Christmas sales might be fairly good.

So, it could be worse, but that may be exactly what it will be in the New Year, when book-buyers face an almighty hangover, not just from Christmas but from many years of a boom fuelled by rises in the property market and credit card spending. 2009 doesn't look a pretty picture.