Shares in Harry Potter publisher Bloomsbury (BMY) jumped 6.5% to 329p after it posted forecast-beating full-year results as reading enjoyed a renaissance during pandemic lockdowns.
One of Shares’ recent Great Ideas selections, Bloomsbury also noted a strong start to the new financial year to February 2022 and expects revenue will be ‘ahead’ and profit ‘comfortably ahead’ of market expectations.
READING PROVIDES RAY OF SUNSHINE
Results for the year to February 2021 beat estimates at every level, with sales up 14% to a record £185.1 million and pre-tax profits lifted by 22% to £19.2 million.
Chief executive Nigel Newton commented: ‘The popularity of reading has been a ray of sunshine in an otherwise very dark year. These results are ahead of expectations and represent our third upgrade this year. These performances demonstrate the strength and resilience of our strategy of publishing for both the general and academic market.’
Newton added that Bloomsbury’s diverse consumer portfolio includes ‘backlist titles which really struck a chord with readers throughout the pandemic on themes such as humanity, social inclusion, escapism, fantasy, cookery and baking.’
During the year, sales of Sarah J. Maas’ titles grew by 129% and Harry Potter sales grew by 7%.
Drawing confidence from its strong financial position and cash generation, Bloomsbury not only increased the final dividend by 10% to 7.58p, but also proposed a special dividend of 9.78p.
THE EXPERT’S VIEW
Danni Hewson, financial analyst at AJ Bell, said: ‘The publisher of the Harry Potter titles is maintaining its magic touch as it guides for the current financial year to be ahead of expectations, the second upgrade in a matter of months, and sprinkles a slice of sorcery over the numbers with a generous special dividend.’
Hewson explained that Bloomsbury faced ‘a painful transition following its mid-noughties peak at the height of Pottermania but it is no longer a one-hit wonder with a diverse list of bestsellers in its portfolio.
‘Bloomsbury has been prioritising its academic and professional publishing arm as part of its growth strategy and a focus on digital resources served it well during the pandemic.
‘Even with returning lots of cash to shareholders, Bloomsbury has plenty of money in the bank and this may raise questions over the prospect of acquisitions to boost its footprint and take advantage of a buoyant market.’
