As indicated by the typical company data, the demand for books and magazine has been very weak and continuously  declining in the past several years probably presenting a permanent trend in this industry.

Sector’s Current, Trend, Causes behind trend, and Future

Current and Trend

1. Generally, stores-based demand for books and magazine seems to have been declining in the past several years as indicated by continuing decline in comparable physical store sales units of some typical companies.

2. Consistent decline in online sales with the part of physical stores of those companies may mean a general decline in demand all across industry and channels but not only a result of slowing down store traffic.

3. Digital content does not catch up as paper-based demand declines.

4. As a result of decline in general demand, it seems that promotion and markdowns have not had a large help in improving visits and convention rate and companies have to pursuing costs cutting to maintain profitability.

Causes behind the trend

1. Changes in lifestyle and habits of consumers may be able to explain the downward trend in demand for books and magazine.

Industry Future

1. There are going to be increasing difficulties for books retailers to adapt changes in preference of consumers.

General Financial Performance of Companies In the Sector

It seems that demand for books and magazine of companies in this sector, according to the typical company data, has probably been weak and declining in the past several years as indicated by declining traffic/sales units of both their physical stores (down more than 5% annually in comparable store sales) and online stores ( down about 10% annually). Therefore, the traffic seems not to go somewhere else diminished. Increasing online stores due to lower pre-opening costs may dilute traffic but should not be the major reason for quick decline in traffic.

Shrinking revenue has been deleveraging expenses of store and online operation. In addition to promotion and markdowns, which seem to not bring more convention, companies in this sector have been seen shrinking gross margin in the past several years. The typical gross margin is about 27% but the typical SG&A percentage of sales is also at that level. Therefore, companies are facing a situation that their profit may go down below to zero in 2018.

The typical price/sales ratio is as low as 0.1.

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