INDUSTRY INSIGHTS

2015 1st Half Newsstand Sales Results

When Source Interlink exited the business at the end of May 2014, the disruption affected all entities in the newsstand channel, publishers, national distributors, wholesalers and retailers. It also affected MagNet's ability to accurately estimate second quarter sales in 2014, as some retailers discarded copies of magazines delivered by Source, magazines that were in the Source warehouses and elsewhere at the time of their demise were never processed, etc.

So, as you review the first half 2015 sales comparisons below to the same period of 2014,  please be aware that the percentage declines are based on what we estimated to be the sales in the second quarter and first half of last year. Also, the 2015 second quarter industry sales numbers include estimates for Barnes & Noble, as we no longer receive that chains' data.

While the percentage sales decline in the first half of 2015 may be overstated if we were too aggressive in estimating first half 2014 sales, the fact remains that the dollar sales decline that we have been experiencing in magazine sales at newsstand over the last eight years appears to be accelerating. We estimate that newsstand magazine sales will generate about $2.5 billion in 2015, just about half of what was generated in 2007. Unfortunately, more timely sales information derived from retailer point of sales data that MagNet collects indicates that sales in July and August 2015 are worse than what we experienced in the first half of this year. Part of the reason is that through the first few months of 2015, the cover price on most weekly titles was a dollar higher than they were during the same period last year. Now that we are comparing like cover prices, the percentage decline of dollar sales on weekly titles has increased. We are also seeing an acceleration of non-weekly title sales declines over the last few months as well.

The reasons for the decline in consumer consumption of content through printed material has been discussed and debated now for many years. No matter the reasons, the fact remains that the newsstand channel is fragile, with more economic pressure being felt by wholesalers, national distributors and publishers. Unfortunately, the causal effect of these sales declines  is that more retailers are making space decisions that are not beneficial to our category.
 
Over the last eight years of sales declines, MagNet has always attempted to find and highlight positives trends within the overall negative outlook. There are still some publishers who are having sales increases, and others who are faring better than the overall industry, either by increasing their title mix and cover prices or focusing on higher priced specials. We applaud them for their creativity and success, and for their continual focus on newsstand.
US & CDN COMPARISON 1st Half 2015 VS 1st Half 2014

Wholesalers distributed 40 million fewer copies in the first half this year compared to last, 1.5 million fewer copies per week. Yet unit sales efficiencies declined to an all-time low of 26.8%. The dollar sales efficiency was 26.5%, with the average cover price on a unit sold increasing over 5% to $5.43. This was driven by not only the higher cover prices on weekly titles, but also the higher cover prices on SIPs and Bookazines.
INFORMATION IN THE CHARTS BELOW EXCLUDES B&N SALES DATA
TITLE RANK COMPARISON 1st Half 2015 VS 1st Half 2014
Unlike in previous periods reviewed, the percentage of decline in sales segmentations is similar across all groups of titles through the top 1,000. Previously the top 25 and top 50 titles had larger declines, while titles ranked in the top 100 and top 1,000 titles fared better. As in previous quarters, those titles ranked below 1,000 continue to see drastic declines in sales, falling 28% compared to 2014 first half. We saw some major publishers reduce their newsstand print orders on many of their titles, with unit sales declines on those titles having similar decreases.
NATIONAL DISTRIBUTOR RANK 1st Half 2015 VS 1st Half 2014
The numbers reflected in this chart are based on which national distributor company is currently billing titles to wholesalers.
MARKETING COMPANY RANK 1st Half 2015 VS 1st Half 2014
This chart sorts sales by the national distributor company that is currently providing marketing services for titles, which in some cases may be different from the company providing billing services.
PUBLISHER RANK 1st Half 2015 VS 1st Half 2014

As outlined in our opening statement, there are some publishers who are "bucking" the downward sales trend. For example Penny Press and Engaged Media had higher dollar sales than last year, while Harris had flat sales.
CATEGORY RANK 1st Half 2015
VS 1st Half 2014

The Game/Puzzle/X-word category with a 5.0% increase in retail sales, was the only category to outperform last year's sales. That increase was driven primarily by Penny Press, which realized a 15% sales increase in the first half 2015. Other notable categories that performed relatively well were the Outdoors and Lifestyle groups of titles. The celebrity and women's title categories continue to struggle. The food/wine category, which had previously performed better than the market didn't do as well in the first half of this year. 
TOP CHAINS 1st Half 2015 VS 1st Half 2014


The top ten chains in 1st Half 2015 represented nearly 52.0% of total sales. The top ten chains in alphabetical order are Albertson's/Safeway, CVS, Hudson News Terminals, Kroger Co., Loblaws, Publix Supermarkets, , Target Corp., Wal-Mart U.S., Wal-Mart CDN and Walgreens. 

All sales are based on issues off-sale in the period described. All data expressed in millions. All data is based on actual wholesale O&R records and reflect all returns processed through 8/20/2015. Please note B&N is estimated in our 1st Half trends and not included in any of the detailed charts and grids. Any questions or additional information requests should be submitted to businessinsights@magnetdata.net.

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