Augsburg Fortress Will Look at its Business Practice

COLUMBIA, S.C. (ELCA) -- The Board of Trustees of Augsburg Fortress Publishers directed its president to standardize business practices, engage consultants' help as needed and consider bringing on a chief operating officer. The board acted in executive session at its meeting here April 23-25.
Augsburg Fortress, based in Minneapolis, is the publishing house of the Evangelical Lutheran Church in America. In an interview the Rev. Marvin L. Roloff, president and CEO, said last year's decline in sales has affected business. "There is a need for clear reporting of information for operating inside the publishing house and assuring a more accurate audit of inventory and of relationships with outside vendors, he said.
Todd P. Engdahl, Denver, chairs the board. Engdahl said, "The publishing house has been going through a long period of modernization, trying to update business practice and adapt to a changing market. Augsburg Fortress has gotten out of the printing business, reduced inventory and centralized distribution. This is another step in that process, a continuing effort that has been going on for at least four years."
The 1997 audit was not completed in time for the board meeting. Roloff explains part of the problem is a process under way to switch computer systems. "The systems are part of a multi-year computer project," Roloff said. "Work continues on bridging the old and new systems." Augsburg Fortress moved to a new location in downtown Minneapolis in December.
The board action "directed the president to standardize and reinforce compliance with and accountability for business practices," including "inventory control, outside vendors, internal auditing, and accounting and purchasing."
It said, "The president will obtain consultant assistance in that effort and consider creation of the position of chief operating officer." The president will also "continue review of products and product development and of the house's current and future market and competitive position."
Roloff said the action addresses "the use of our materials in the ELCA and how we respond in the development of new materials. It concerns how we will create products that will match the flexibility and adaptability congregations require in their use of published materials. This is quite true for all denominations right now."
Robert W. McNulty, vice president for finance, called 1997 "a year of modest financial improvement, clouded by the looming threat of continuing declines in sales revenue."
The publishing house recognized gains from the sale of the real estate at its old location. McNulty said operating performance was "significantly below planned results for the year due to the decline in sales as opposed to planned growth."
Net sales in 1997 were approximately $55.4 million, down 4 percent from the previous year and 6 percent below planned sales, McNulty reported. Sales of education resources were down 11 percent, book sales were down 8 percent, he said. Sale of ELCA-related periodicals and resources was up more than 3 percent.
The board approved a policy on business ethics. Roloff said, "Employees have been very supportive of the need for a policy and have given excellent comments." He said, "We believe it will be very helpful in building and strengthening the corporate culture we would like to have at Augsburg Fortress."
In Columbia the board visited the campus of Lutheran Theological Southern Seminary where an Augsburg Fortress bookstore is located. The board talked about the relationship between the publishing ministry and theological education.
Robert R. Hanson, director of the sales unit, said on-site Augsburg Fortress stores are sought by ELCA seminaries. The store at Southern has been active for three years.
The Rev. H. Frederick Reisz, president of Southern, called the presence of the bookstore "critical, because we are training Lutheran students for Lutheran ministry. They need familiarity with the Lutheran publishing house and its products. The faculty sees Augsburg Fortress books and authors alongside other scholars and writers."
Reisz said all ELCA seminaries are in "generational transition" as post World War II scholars move out of teaching. He expressed concern that "younger Lutheran scholars, the new community of scholars, need to find a way to publish and establish name recognition."
Reisz stressed the importance of technological competence among students, faculties and the ELCA's publishing house. "We tremble," Reisz said. "I could probably count on one hand the faculty who know how to write a CD-ROM."
Augsburg Fortress has established a new relationship with the bookstore at Luther Seminary in St. Paul, Minn., Hanson said. The retail store in Minneapolis was closed in December when the corporate offices moved. Two other stores are scheduled to close this spring, at Hicksville, N.Y., and Omaha, Neb. A new store will open in Pittsburgh June 5.

For information contact:
Ann Hafften, Director (773) 380-2958 or NEWS@ELCA.ORG
http://www.elca.org/co/news/current.html