In the Annual Report for PMP Limited which was released last week, the Gordon and Gotch magazine distribution business reported a decline in revenue of 4.6%, to $408.9 million, and a decline in profit of 42.4% to $7.5 million.
The report notes that PMP has undertaken some restructuring including redundancies. Newsagents would have seen this in the last year.
My understanding is that more redundancies are on the way which will impact newsagents.
While some newsagents will take pleasure from the bad news for the Gotch operation, I am concerned for a number of reasons:
- To improve the situation Gotch will need to cut costs and increase margin – moves which would not be good for newsagents.
- They will probably look at how they can increase sales. Every additional bundle of magazine they distribute improves their situation because the logistics overhead is there regardless.
- Would they consider extending distribution beyond the newsagency channel? remember, they are paid based on volume distributed.
- I wonder if the Gotch situation is a tail reflecting what we have experienced or a warning of greater challenges to come in the magazine space.
- If they are unable to arrest the decline will they look at alternatives which are not palatable to newsagents?
A couple of years ago, publishers and distributors said that the magazine sales decline was temporary and impacted by external events. It has been going on for too long and impacting too many levels in for this to be the case. Publishers, distributors and retailers are all reporting declines. It is the retailers who carry the largest cost since we have only one income source and that is highly speculative.
They better not make to many cut backs because the lads in the back room sorting out early returns are going to be flat out this month. I am going probally overboard with returns this month as i am sick and tired of not making any money off magazines . i hope they suffer more of a decline like they make us suffer decline after decline every month .Maybe they should call up there own call centre for some advice only to be told to run there business better
Gotch isn’t the only one seeing 40+% decreases in mag sales.
They will never admit it but maybe their problem is the little Hitlers that cut newsagents off, refuse credits and send out extra stock that they know will not sell. You would have thought they would have learned from NDD closing that they can no longer can act so aggressively against newsagents and still expect to grow business.
For us, Network is at least working with us and we are seeing good results with their mags.
We had a visit yesterday from our lovely G&G merchandiser. She is one of approx 80 merchandisers who have just been told that they will be given redundancies on 1 Nov 2010. Great timing for them them just before Xmas and as school leavers join the workforce to compete for jobs.
i wonder what could happen if they actually worked with us instead of against .
I don’t know that any ‘pleasure’ would be taken from this situation by newsagents.
After all, any impact on distributors will eventually be passed on to us.
However, I do concur with Luke in that the lessons from NDD’s closure haven’t sunk in, past the remaining getting more titles to foist upon newsagents and earn commission from.
We have no merchandisers in the West to my knowledge. often we do not get collateral. Gotch is always good on the phone but only if you can get through. Network the same. The real issue appears to be over and under supply of mags. The waste of paper and transport is amazing. Surely there is a better way for them to be paid rather than just on volume. There would be no interest in trying to reduce print and transport costs to the publisher if that is the way they are paid. The cost to both companies must be considerable in monitoring returns. Perhaps a no returns policy, better margin for newsagents and our right to order rather than be delivered to would be better. I already have made a decision not to sell diaries or calendars because I get a better margin elsewhere. It all goes back. Another waste. If they are asked I could save money for them now.
What is surprising is that the executives of the company are faceless.We have no access to them and they have no direct contact with us.
While talking about distributors, does anyone know when we are getting our credits paid from NDD. I can’t get a response from them and I could really do with the $2000 they owe me.
The main problem is DEBT Most small businesses and many others interacting with them carry far too much DEBT
This is a time for co operation not confrontation for all involved.
Carol, ndd cheque took 2-3 weeks to arrive after talking to ndd accounts department.
Carol,
We received a letter from NDD outlining final returns, credits and payment of outstanding monies. That letter stated that if you have a credit, you need to email your account manager (email on your NDD statement) in order to arrange payment to you.
Thankyou Wendy. I have emailed them but have not received a response.
graeme
yes debt is a real issue, but part of this debt problem is how newsagents are valued or should i say overvalued!!! most do not earn enough to service the debt that is taken on in order to purchase the business in the first place. as hard as this is going to be there has to be some re working of business valuations to a more realistic figure. the old way may have been fine prior to deregulation, but it just doent work anymore. Yes i do own a newsagency, and had i know then what i know now things may have been different when i purchased the business. I am also trying to purchase another newsagency, but the owner is asking way too much because he paid too much when he purchased it, its tough trying to break the cycle. with the banks being much tougher on business lending, i think valuations will have to change or nobody will be able to sell.
My blog post about the financial performance of Gotch has nothing to do with debt.
Rick, newsagencies are grossly overpriced.
Still they have come a long way from some years a go ehen they were running at a loss.Starting to get the over load all ready.
It is called the free market ,get the best price you can why give it away
Mark, I didn’t say your blog or you did did. Those shadows Mark? Debt has a lot to do with most small businesses’s problems and a lot of their business partners have the same problems, Some of the largest companies are debt stricken and have to tighten their cash flows. Rick I believe what you say has a lot to do with it, valuations are changing depending on the quality of the business (figures) and the presentation-both good and bad has a lot to do with it.
They, newsagencies small business is going throgh a tough time. Also a lot hass to do with the lack of understanding cash flows and what money belongs to whom.
ndd owes us over $5000. do i need to call them to ask for the $$$? or they will automatically send me a chq.
gotch- it would not surprise me the way they send me the amount of mags.
Eric send them a letter fromm a debt collector agency , just like they sent me not so long ago and now they are the ones owing the money
Eric, I think Ndd are trying to string the credit payments our until possibly November. We would have had supply stopped by them if we had not paid our account but what can we do? Its putting a strain on me as my Network accounts are now larger with huge over supply of junk. If the waste across the boards with magazines of overprinting, oversupply and returns was looked at everyone would benefit. The distribution system is all wrong so lets think of a model that will suite all involved.
Chris,
Debt has nothing to do with the valuation of product The ease of credit or the availability of money has the debt itself can and will immpede on the business’s ability to repay and that is a running cost of profitability.
Borrowning money to purchase is a Capital cost and if te home work was done properly should work its way through the period of the loan.
When people say that nbewsagencies are overpriced they usually mean tht when it comes to buying I have yet to meet a newagent that has their business for sale that dosen’t think in the reverse.
The market and the Bank (if one is borrowing -) decides for the willing seller.
Then Graeme I don’t see the relevance of the cash comment to my original post.
ALL OU.R ALLOCATION OF WOMANS DAY, TAKE 5, PEOPLE, PICTURE AND OTHER MAGS WERE DELETED BY SOMEONE AT NETWORK SERVICES. IN THIS CASE (OUR ACCOUNT IS CURRENTLY IN ORDER) IT SHOWS WHY PUBLISHERS ARE SUFFERING, WHEN YOU HAVE INCOMPETENCE MAKING ERRORS AND CAUSING LOST SALES OPPORTUNITIES. I AM ONE ACCOUNT, HOW MANY OTHERS HAS THIS HAPPENED TO??
CHRIS
Chris yes with GG all my data was wiped out and had to be started from scratch , this was last year some time
Confirmation this morning that 80 merchandisers have lost their jobs at GG. Our worst nightmare as N/A is that Network will have the monopoly and then see how much stock we will get and how much junk.
It is now AN IMPERATIVE that the ANF goes to bat for newsagents so that our terms of trade are changed within the signed contracts which should be made null and void (I’d like to see that)
Times have changed and Network will have to change with those times to reflect the modern industry and contractual obligations. Not
having negotiated a new contract for many years is the biggest downfall of the ANF and what it stands for, which is
the protection of its members (us) from this sort of treatment.
I actually think that Network would re-negotiate our agreements were we to get our act together and present an alternative such as one discussed above –
firm sale and ability to order what we require.
There is a lot of dead wood in this industry (dead mags)
that need to be chopped out and some
pain will be necessary before gain.
Rep bodies need to act on this fast, and already have stuff drafted, at the very least by NOW. God knows they’ve had enough time to work on this. Years and years.
all that has to be done is use the same sale and returns percentages that they use for the weekly mags eg NI , WD ,people , picture , zoo , new weekly etc there is no way in the world that they would give us 50% more of these than we want., so we all know there is a system that works out for both parties so WHY not use it . That advice was free any more great ideas i will have to charge for it :}
Mark, See Rick 12.
Mark and Graeme , i think you both have to have a little get together work out whos shadow is whos . you never know mix both your minds together who knows what will happen