Upbeat outlook

Despite all the RED(group) ink, the firm’s communications manager Malcolm Neil said the company was “relatively happy with the result in a tough market”. “We took $30m in writedowns, and a large part of that was CD and DVD inventory,” he said. REDgroup’s balance sheet also suffered under the weight of a $24m interest payment on borrowing. They also announced a refinancing deal, as Bookseller + Publisher is reporting…

Backed by its long-term bank BOS International and new financier Fortress Investment Group that will ‘refinance REDgroup’s senior debt to December 2012′ and redeem its NZX listed Retail Notes (valued at NZ$35 million) on 15 December 2010.

So this announcement looks to have drawn a line under the short-term hit REDgroup took in setting up the infrastructure to phase out physical goods and move more resources into ebooks.

Sales on the improve

On that front, it’s all systems go in terms of ebooks sales and deals.

“We’re averaging 1000 sales a day, at an average price of just above $A10,” Neil says. “And that’s not counting free ebooks. Gutenburg ebooks are free through us – not like Amazon, who seem to charge for the pleasure of their company.”

In the drive to sign all Australasia’s major publishers, REDgroup is expecting to confirm the last deal – with the local arm of  international publisher Hachette – imminently. “Our first Macmillan title went live on the site today, so that proves that deal is done. It’s just a matter of getting more of their titles live.” REDgroup is optimistic that embracing ebooks will pay off quickly, as says the recent results indicate the trend has already started. “We’re really pleased with online sales,” says Neil. “I reckon we could see about 2% of total sales as ebooks in terms of run-rate in our first full year – that ends about May. I would expect that to lift to 7-10 per cent in year two. And that’s being realistic.

Platform push

REDgroup are counting on building a comprehensive catalogue of Australiasian ebooks – which will be the first and only one in existence. Neil says more e-titles can only be good for the company. “We’re expecting that having more ebooks will mean more sales.” And more sales across more platforms too, it seems. The company is expecting to release the Android and Blackberry versions of its Kobo ereading app next week. “We’re still playing catchup in merchandising and tech issues, but we’re getting there.”

Editor’s Note:  Jason Davis is an Australian journalist and he also runs EBookAnt and BookBee.  PB

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