Inside Move: Random acts
House keepers push 12% margin of return
Delivering what he termed a "state of the union" address to 1,700 staffers at Gotham's Marriot Marquee Hotel, Olson said the publishing house was expected to achieve 12% return on sales next year.
That's quite a challenge in a thin-margin business like publishing -- and it would make Random House a profit leader among the German conglom's various media holdings. Bertelsmann topper Thomas Middelhoff recently said, in a memo leaked to the press, that the parent company would be happy to achieve a 10% return on sales as it positions itself for a possible IPO.
Random House will only reach that mark, Olson said, through cost-consciousness. A penny saved in production on a single book, he noted, can generate more than $3 million at the bottom line.
No Random House employee, Olson announced, would see more than a 4% raise next year.
The company "is still on course to have an extremely profitable year," says Random House spokesman Stuart Applebaum. But that may not be true of the book trade as a whole.
"There's a general weariness out there," says Applebaum. "People are more careful about their discretionary income and more discerning about the books they're purchasing."
