INDUSTRY INSIGHTS

2015 VS 2014 Q4 & ANNUAL NEWSSTAND SALES OVERVIEW

Newsstand sales during the fourth quarter, 2015 declined by 7.6%, a sharp reduction in the sales falloff that the industry experienced during the first half of 2015, and a more than two percentage point improvement over the third quarter decline. In aggregate, the group of titles ranked between 100 and 1,000 actually increased in sales during the fourth quarter, 2015 when compared to the sales of titles that fell within the same segment during fourth quarter, 2014.
However, the industry still experienced a 13% dollar sales drop during 2015. As mentioned when we presented the first half 2015 sales numbers, part of that double digit decline can be contributed to the fact that MagNet had overestimated 2014 first half sales, the period during which Source went out of business. Accurate sales information was unavailable in many of the accounts that were affected by the Source demise for that time period. Comparing inflated sales numbers in 2014 to 2015 results would lead to higher percentage declines.
We have often commented that consumers will buy magazines at the newsstand, as long as the content is interesting to them, and they see value in the magazines that they purchase. To that point, a new subject category that has really caught fire on the newsstand is adult coloring books. While they did well in higher priced book form, the subject matter is doing very well in the magazine format. In the fourth quarter of 2015, more than $10 million was spent on adult coloring magazines. Similar to the book-a-zine phenomenon, this is just another sign that the newsstand can  generate significant sales of quality magazine titles with great content that pique consumers' interest that aren't available through subscriptions at a cheaper price. We also see unit and dollar sales growth in many regional titles that are more likely to have their newsstand cover prices and subscription prices at similar levels since they aren't normally tied to rate bases for advertising purposes.
We would urge those publishers who have lost interest in the newsstand business as they shifted their focus to digital, and have learned that the investment in that platform is difficult to monetize due to lack of advertising revenues, to rethink their position relative to print and the newsstand. If you can produce good quality titles with relevant content and provide it to consumers at a price that provides value, you can make money. Many publishers who follow this formula are doing well at the newsstand.
US & CDN COMPARISON Q4 2015 VS 2014

Non-weekly title sales performed well in November and December, 2015 with dollar sales declines down only about 5% based on the retailer POS information that MagNet captured. The weekly celebrity titles also performed better in the last two months of the year then they had during the period January through October. Overall unit sales efficiency fell to 26.1%, adding additional costs to publishers and wholesalers for producing and distributing unsold copies. The number of units distributed compared to 2014 fourth quarter dropped by 7.7%.
US & CDN TITLE RANK Q4 2015 VS 2014

During the fourth quarter, the top 100 titles, as has become the pattern, contributed significantly to the sales decline. Collectively, those titles ranked in sales between 100 and 1,000 performed well, with unit sales in 2015 compared to 2014 being flat, while dollar sales were over 7% higher for that title group than in 2014. Titles ranked below 1,000 in sales continued their precipitous decline with sales off by 58%.

As mentioned in previous reports, these are not same title comparisons. The numbers and percent changes are based on the sales of titles that fall within the ranking ranges during the period.
US & CDN COMPARISON ANNUAL 2015 VS 2014



Total industry dollar sales during 2015 fell below $2.5 billion. Wholesalers distributed 84.4 million units fewer than they did in 2014, a reduction of over 4.5%, yet sales efficiencies declined by 3.5 percentage points to 26.4% for all of 2015.
ANNUAL NATIONAL DISTRIBUTOR RANK 2015 VS 2014
 
These numbers are based on which national distributor is currently billing titles to the wholesalers. 
ANNUAL PUBLISHER SELL THROUGH 2015 VS 2014

Publishers across the board saw their titles' sales efficiencies decline by over 10% in 2015, with the top ten publishers, most of which have checkout titles, actually performed better than publishers who only have titles on the mainline fixtures. On a unit sold basis, publishers' costs are increasing as they sell less of what they produce. Publishers should focus on removing wasted copies from the newsstand in order to reduce their paper, print and shipping costs.
ANNUAL CATEGORY RANK 2015 VS 2014

Titles in the two largest subject categories, Celebrity and Women, represented 38.9% of all newsstand sales in 2015. In 2014, they represented 39.5% of all newsstand sales. Their dollar sales decline in 2015 compared to 2014 was about 14.5%, compared to the overall decline of 13.0%. We are all aware of the gradual sales decline of the celebrity category over the last several years. What is concerning about the Women's category is that its sales decline is accelerating, down 12.5% in 2014 compared to 2013 sales, and now down 18.4% in dollars comparing 2014 and 2015. Some publishers with titles in the women's category have increased lower priced subscription offerings in order to meet advertising rate bases, which is having a significant impact on newsstand sales for many titles in the category ranked second in sales.
TOP 100 CHAINS RANKING 2015 VS 2014


The top ten chains in 2015 represented 52.8% of total sales. In 2014 the top 10 chains represented 51.4% of total newsstand business. The top ten chains in alphabetical order are Albertson's/Safeway, B&N*, CVS, Hudson News Terminals, Kroger Co., Loblaws, Publix Supermarkets, Target Corp., Wal-Mart U.S., and Walgreens. 
 
* B&N sales estimated
ANNUAL CLASS OF TRADE COMPARISON 2015 VS 2014
CLASS OF TRADE BY SELL THROUGH PERCENTAGE


The terminal and Club Store classes of trade had the highest average sales efficiencies, a result of the fact that they handled the fewest number of titles. Drug and convenience stores had average sales efficiencies of about 20% in 2015, which is a byproduct of their low dollar sales volumes per average store. Some drug and convenience store chains reduced their emphasis on the magazine category which led to their large sales declines. While all COTs had sales declines in 2015, the bookstores and club stores performed best.
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 03/01/2016. Any questions or additional information requests should be submitted to businessinsights@magnetdata.net.
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