From Where I Sit

Why I Am (Still) Excited About Christian Retail

Last Saturday, April 12, I spoke to Christian Retailers at our inaugural Open House event. It was video-taped, and you can watch it here if you are interested.

Because the file was so large, I had to upload it as five separate videos. The total length is 40 minutes or so. However, if you click on the link above, it will play all five videos as a YouTube “playlist,” with each video playing one after the other.

Five Books on the New York Times Bestseller List

I have worked at Thomas Nelson for almost ten years. The most books we’ve ever had on the New York Times bestsellers list at one time is three. That was more than two years ago.

Yesterday, we were notified by the Times that we will have five books on the October 21, 2007 list. This is a new record for our company. These include:

The Largest Quarter in Our History

We just announced today that the quarter ending September 30 was the largest in our 209-year history. Net revenues were up 10% for the quarter and 10% for the first six months of its fiscal year. (Our fiscal year runs from April 1 to March 31.) EBITDA was up 10% for the quarter and 18% fiscal year-to-date.

Our publishing segment has been especially sucessful this year. It was up 12% for the six months ending September 30. I believe this is the direct result of our One Company initiative. This initiative has afforded us the focus we needed to create products that are relevant to consumers.

Ten Reasons I’m Excited About Christian Retail

For the last five years, I have heard constant complaining about Christian retail. Publishers complain. The media complain. Even Christian retailers complain.

It is time for this to stop. Enough is enough. I believe we have talked ourselves into a slump. Therefore, I am declaring a moratorium at Thomas Nelson on negative comments about Christian retail. I don’t want to hear them. These comments aren’t helpful, and they sure aren’t empowering.

I want us to change our thinking. We can see the glass half empty or half full. I want us to see it half full. Things are never going to improve until we learn to give thanks for what we already have and start focusing on the positive.

To get us started, here are ten reasons why I am excited about Christian retail. I am deliberately choosing to focus on the positive.

The Top Ten Publishers in America

For years, we have said that we are the largest Christian publisher and the ninth largest trade publisher in America. However, I have never really been able to get at the data behind this claim. Now I have it. As it turns out, we are bigger than I thought relative to other trade publishers. We are still the largest Christian publisher, but we are actually the sixth largest trade publisher.

Over the past several months, we have compiled a proprietary database made up of various point-of-sale databases. It includes all the major retail sales channels. It does not include international, ministry, book fairs, direct-to-consumer sales, etc. If it did, we would be higher on the list because of our robust ministry, school fundraising, and live event sales. Scholastic would also be higher on the list because of their huge book fair business. However, this database only tracks sales through retail channels.

We are now updating this on a monthly basis. As far as I know, we are the only publisher in world who has this information.

Based on the twelve months ending November 30, the top ten trade publishers are:

Top Ten Trade Publishers
Rank	Publisher	Market Share
1	Random House	17.2%
2	HarperCollins*	13.3%
3	Simon & Schuster	9.2%
4	Penguin	8.7%
5	Hachette	5.9%
6	Thomas Nelson	4.8%
7	St. Martin’s	3.2%
8	Tyndale	1.9%
9	John Wiley & Sons	1.7%
10	Scholastic	1.6%
Total Top Ten		67.5%

*Includes Zondervan

Why I’m Cautiously Optimistic About 2006

I’ve noticed an unusual amount of good news in the air over the past week. Frankly, given the impact of Katrina earlier this fall, the subsequent rise in fuel prices, and the impact on consumer confidence, this is very positive.

Consider the following four items:

First, Consumer confidence is the highest it has been since just prior to Katrina. It rose to 103.6 in December, up from 98.3 in November. It’s still not as high as it was in August (105.5), but it is definitely improving.

Second, holiday retail spending rose 8.7%. This was for the period that began on the Friday after Thanksgiving and ended at the end of the day on Christmas Eve, December 24 compared to the same period last year.

Third, based on our own internal analysis of our BookScan data (the Nielsen subscription service that measures point-of-sales movement through general market retailers), we sold 202,274 units for the week ending December 26. Last year, we sold 140,513 units for the same period. That’s a 44% increase. This is no doubt related to the performance of newly-released major titles, but I think it also reflects improving conditions at retail.

Fourth, according to the STATS report (the Evangelical Christian Publishers Association subscription service that measures point-of-sales movement through Christian specialty retailers) for the week ending December 26, we had 14 of the top 50 best-selling products. Zondervan, our nearest competitor had 7. (HarperCollins, Zondervan’s parent company, had 8 titles, but these were all C.S. Lewis or Chronicles of Narnia related titles. They generally have no titles in the top 50, so I see this as a temporary anomaly related to the current popularity of the movie.) Best of all, our 14 titles were from 10 different authors. Captivating by John and Stasi Eldredge is still the best-selling title at Christian retail, now outselling the Purpose Driven Life by Rick Warren by 14%.

These facts make me cautiously optimistic as I look toward 2006. I say “cautiously” because all the data is not yet in, and I’m sure the analysts and the economists will soon produce data on the other side of the ledger. (Reminds me of the story about Harry Truman. Frustrated that his economists were all saying, "On the one hand ... but on the other hand,” he supposedly said, “Give me a one-handed economist!”) Nevertheless, I am encouraged by what I see and hope this bodes well for the new year.

Three Simultaneous New York Times Bestsellers

Last week, we had three books on the New York Times Advice list:

• #8 One Minute Wellness by Ben Lerner
• #13 The Total Money Makeover by Dave Ramsey
• #15 Captivating by John and Stasi Eldredge

All of these books were published by the Nelson Books division. This is a first for our company and definitely worth celebrating. Congratulations to Jonathan Merkh, the Nelson Books Publisher, and his entire team!

Technorati Tags: bestsellers, new york times

The Year in Review

Last week we published our Quarterly Earnings Release. In case you missed it, we finished our best year ever and our best quarter ever. For the year, net revenues were up 7 percent, from $222.6 million to $237.8 million. Net income was up 22 percent from $16.2 million to $19.8 million.

For the past several years, we have focused on improving margins. We have paid less attention to top line growth. That changed last year. Because our margins were in good shape and the business was healthy, we felt that we were in a good position to start growing the top line again. However, we didn’t want to sacrifice our profitability to do so. This last year we proved to ourselves—and the Street—that we could grow our top line at a respectable rate and still improve our bottom line. In fact, we grew the bottom line three times faster than the top line. This is encouraging.

Nelson Still Dominates the CBA Bestsellers List

One of the most important metrics we track is the number of titles we have on the bestseller lists. For example, in the last twelve months, we have had eight books on the New York Times lists. By my count, this is four times as many as our nearest competitor. It is the most in our company’s history. It demonstrates that we are doing a better job penetrating the general market than ever before.

However, an arguably more important list is the CBA Marketplaces’ Top 50 Christian Books. This measures our performance against our competitors in our core market channel. (Just for the record, CBA still accounts for approximately 44% of our publishing revenue.)

The Million Bible Challenge

In February, we launched “The Million Bible Challenge.” The purpose of this campaign is to motivate non-Bible readers to read the Bible. We wanted to provide an inexpensive version of the NKJV Bible so that individuals and churches could “pull out the stops” and help us (literally) get the word out. This is a year-long campaign, running from Easter 2005 to Easter 2006.

The offer for consumers and churches is very compelling: “Buy 5 Bibles for $5.” The Bible is also available in case lots of 20 Bibles for $20. The market response has been amazing:

• So far, we have already shipped 500,000 Bibles. As of this morning, we have almost 326,000 copies on back order. We thought it would take a full year to move the million Bibles. Obviously, we underestimated how the market would embrace this program. We now believe that we’ll exceed a million before Mother’s Day.


• These results drove the NKJV to the #1 market share position in the Christian bookstore market. (This is STATs results for March, which are reported in the May numbers. The NKJV has a 33.55% share, the NIV a 22.38% share, and the KJV a 14.66% share.) Not that we are competitive!

Operations Staff: We Couldn’t Have Done It Without You

It’s too soon to announce our operating results for our fourth fiscal quarter, ending March 31. We are still assessing the results. Even I don’t know how we finished.

Regardless, it’s not too early to extend a hearty round of applause for our Operations and Finance team for delivering over-the-top, outstanding, year-end performance. Whatever the final results, we couldn’t have accomplished what we did without their long hours and hard work.

Consider the fact that we released 141 new products in March alone. Beginning the end of February, we went to mandatory nine-hour weekdays plus eight-hours on Saturday—a 53-hour work week. During February and March, the Distribution Center (DC) staff worked 50 of the 59 calendar days. While many of the rest of us took Good Friday off, they worked on the holiday, including Saturday. Thankfully, they did not work Easter Sunday, even though it was the last weekend of the month.

Buzby Outperforming Previous Hermie Titles

I just received an e-mail from Brian Mitchell, VP of Marketing for General Markets and Specialty Products. He reports that

In the first seven weeks of Soundscan (Christian retail only) sales scans, Buzby the Misbehaving Bee is outperforming all previous Max Lucado’s Hermie & Friends titles ...
 
We are experiencing a 49% increase in sell-through from the original Hermie: A Common Caterpillar release and 122% increase over the last release, Webster the Scaredy Spider.

Hermie has become our dominant children’s brand at Tommy Nelson. It is encouraging to see that it is still building in strength. Congratulations to Dan Lynch, Dee Ann Grand, Bill Reeves, Brian Mitchell, and everyone else who has been working with Tommy on this important brand.

WestBow Press Publishing “More Innovative Fiction”

WestBow Press received some great coverage in the March 28 issue of Publishers Weekly. Here are a couple of excerpts worth noting:

Thomas Nelson’s WestBow imprint is quickly gaining a reputation for publishing more innovative CBA fiction. Launched in late 2003, WestBow’s intention from the start was to raise the bar. “Our primary goal isn't ‘edgy’ fiction but stories with a real, authentic voice that are entertaining, culturally relevant, and God honoring,” said publisher and industry veteran Allen Arnold. “When we find those voices, we don’t shy away from the edgy elements—or sugarcoat them.”

Impressive First Week for Captivating

Last week we officially published Captivating: Unveiling the Mystery of a Woman's Soul by John and Stasi Eldredge. One of our largest chain customers reported that the book had sold 6,957 copies (including the pre-sale units) in their stores last week. To get some perspective on this, they sold 3,244 copies of The Purpose Driven Life during this same period. They sold 1,929 copies of Your Best Life Now by Joel Osteen.

Another customer reported to Gary Davidson, our VP of CBA Trade Sales, that he was trying to build an endcap of the book and customers were buying them as fast as he put them out. I had a similar experience. I took five copies home to my daughters. They scarfed them up so fast, I was afraid I was going to get hurt! All their friends are now reading it. While anecdotal, these are encouraging signs. I'm praying that this book becomes even bigger than Wild at Heart.