Record chapter for Bloomsbury

During the first lockdown, many people rediscovered a love of reading. As a result, sales at Bloomsbury Publishing (BMY) rose steeply and the group repeatedly beat market expectations. As Covid restrictions were lifted, however, some feared that reading would fall out of fashion once again.

These concerns have so far proved unfounded. Sales at Bloomsbury are up 24 per cent year on year, while adjusted profit before tax has jumped by 40 per cent to £26.7mn. Growth has been fairly consistent across all divisions: adult revenue is up 26 per cent at £55.2mn and children’s revenue has risen by 25 per cent to £93mn. (Amazingly, almost 25 years after publication, Harry Potter sales are still growing by 5 per cent each year.)

While still smaller than the consumer division, Bloomsbury’s non-consumer arm – which consists of academic and professional resources and special interest products – is also fast expanding, with adjusted profit before tax up 68 per cent at £9.1mn. This is encouraging as non-consumer publishing tends to have higher, more predictable margins, is less reliant on retailers, and ushers in more digital opportunities. As such, it’s a key part of Bloomsbury’s growth strategy.

The publisher’s specific digital resources arm is performing particularly well. When it was first established in May 2016, management predicted it would generate £15mn of sales by the year to February 2022. It has actually surpassed this target, delivering revenue of £18.6mn and profit of £6.8mn.

Bloomsbury has long been defined by its Harry Potter hit. However – while literary crazes remain very important – the publisher has sensibly diversified its revenue stream and future growth looks less reliant on consumer trends and the shares hold their own at a forward PE ratio  of 18 for 2022. Buy.

Last IC View: Buy, 370p, 10 February 2022