Category Archives: The In & Out

Blooming Bloomsbury!

HP Sauce (aka Harry Potter) past its sell by date or a classic? Ok. They still stock it at Tesco’s but what about Aldi? And, indeed, what about Bloomsbury Publishing? It is eight years since JK Rowling published the seventh and final book in her Harry Potter series, but she has enjoyed a fresh surge in sales after her publisher reissued the novels with new covers. Has it done the trick? The jury is out.

Bloomsbury enjoyed a 29 per cent increase in annual sales of the titles thanks to the new editions, which were designed by Jonny Duddle, the children’s illustrator, and released last year.

Group turnover rose 1.5 per cent as Nigel Newton, the chief executive, managed to offset a decline in adult titles, including sales of ebooks, which have slowed across the industry. Digital sales fell about 4 per cent and make up barely a tenth of all sales.

Mr Newton has invested in more stable academic and professional publishing, helping to nudge up profits to £9.6 million in the year to February and allowing him to lift the dividend by 5 per cent.

The group, which has a big stable of celebrity authors including Heston Blumenthal and Hugh Fearnley-Whittingstall, said that A Court of Thorns and Roses by Sarah J Maas and Jonathan Strange & Mr Norrell by Susanna Clarke, which is being televised, have sold well in recent months. And, last but not least, it has a foothold in India, one of the fastest growing markets.

“There does seem to be a bit of a lull at the moment,” Mr Newton said of ebook sales. He pointed to “anecdotal evidence of people giving up their e-readers and going back to print” and “new evidence that people remember things more clearly if they read it in ink on paper rather than in a digital format”. Pinkers verdict: Heartening, indeed!

The fact is Bloomsbury has moved on, using the substantial magical revenues wisely. A beautifully managed programme of diversification into academic and educational publishing whilst retaining the more traditional staples such as children, fiction and non fiction, has reaped rich rewards over the years. The balance sheet is strong and the company is trading on a P/E of 15, yielding 3.5%. The shares have performed well over the last few months but seem to be treading water now, range 170-180p. The 52 week intra day high is 188.50 and one has to go back 7 years when they last broke the 200p barrier.

In summary: Bloomsbury is a consistent performer and it is almost surprising that none of the big boys have been tempted to have a nibble at it. After all, this relatively small outfit is the Bentley of independent English publishers… and we all know what happened to the venerable car maker.

Takeover is on the cards. BUY!

Menzies makes a meaty meal!

Lakestreet Capital Partners, a top 10 investor in John Menzies (MNZS.L) with a stake of about 3%, has called on the Scottish company to consider splitting up, believing its distribution and aviation services businesses would be worth more apart. The Swiss investment firm’s move is the latest example of shareholder activism in Europe. It said talks are ongoing with the company’s management to improve revenue performance and margins. Lakestreet considers itself an active investor and targets companies it believes are undervalued but have strong long-term growth potential. Its investment strategy includes engaging with company management.

Lakestreet are right: As opposed to Connect Group, Menzies main rival, the company has done little to improve the performance of its individual parts. Connect cleverly ‘consolidated’ by splitting itself into three separate entities, improving focus and performance. Menzies does not appear to know where it’s going. And that’s a good thing: It makes a meaty meal and Lakestreet are well ahead of the curve. Consolidation in the sector is rife!

Further to this: Buy the blood!