ELCA Publishing House Financial Outlook Improves, Board Told

MINNEAPOLIS (ELCA) -- The financial outlook for Augsburg Fortress, the publishing house of the Evangelical Lutheran Church in America (ELCA), is generally improved in 2000, its board of trustees was told at its Oct. 12-14 meeting here. The company expects to achieve its sales goal, its expenses are under budget and its balance sheet remains strong, said George W. Poehlman, vice president for finance and treasurer.
The improved financial news was reported one year after the company enacted a significant reorganization plan affirmed by the board that focused the publisher on specific markets. The company reduced its work force and expenses in an effort to improve its financial health, which had been declining for several years.
Sales through September were nearly $41 million, about $600,000 more than last year, Poehlman said. Augsburg Fortress has had increased sales only once in 12 years, he said. The 2000 sales figure through September is less than the company's forecast, but Poehlman said Augsburg Fortress' management is "confident" it will achieve its goal of a $2 million sales increase over 1999.
Operating expenses are about $23.6 million through September, $2 million less than budgeted. "Expenses are under control," Poehlman said.
Poehlman told the trustees the company will likely fall short of its operating profit goal of $500,000. Augsburg Fortress published a new catalogue of its resources, the cost of which is responsible for the drop in anticipated operating profit, said Kenneth G. Hartwell, senior vice president and chief marketing officer.
"This is not the end of the world," Poehlman said of the expected operating profit revenue. "It is more significant for us to end the year finally showing a turnaround on the sales end."
The board spent a full day listening to and discussing three-year business plans for all of Augsburg Fortress' small business units (SBUs). When it reorganized in 1999, the company formed several SBUs to serve specific publishing markets. The SBUs consist of an ELCA group, an ecumenical group, a professional development group, a consumer group, a Canadian operations group and a new ventures group.
"The reorganization we undertook 12 months ago is complete," said Charles C. Halberg, chief operating officer. He reviewed how the publisher has changed in one year. "This has been an extensive exercise," he added.
Through September, sales of consumer publications and academic publications were ahead of forecast, while sales to the ELCA and ecumenical markets were behind forecast, Halberg said. SBU vice presidents reviewed with the board extensive plans for their publishing groups. Many board members expressed optimism following the presentations.
"I thought we'd be going to a wake today," said Fred J. Korge, board member, Houston. "Because of the 'guts' of management to hire new blood and be open-minded, we're not at a wake today. We're at a celebration."
"It was an honor for us as a board to know of your commitment and see the work that's been done," said Dr. Mary E. Hughes, board member, Columbus, Ohio, following the discussion.
"Today showed a definite shift in the organization," said James Myers, board member, Kailua, Hawaii. "I feel very good about the organization."
The board also discussed several other matters:
+ This fall Augsburg Fortress launched its new magazine, "Sunday/Monday Woman," intended to reach Christian women. The magazine has generated 10,000 subscribers, and the publisher hopes to have 71,000 subscribers by the end of 2001, said Tia Simons, vice president, consumer group. By the end of 2001 the magazine should be close to breaking even on expenses versus revenue, she reported. Sunday/Monday Woman is developing a Web site and editorial advisory council, Simons said.
+ Augsburg Fortress should expand its pool of Lutheran writers to include more people of color and women, said the Rev. Barbara R. Rossing, board member, Chicago. "It is really important we represent the best of ELCA scholarship more broadly," she said. Rossing and others also cautioned the staff not to abandon publication of Christian- oriented materials related to hunger and justice issues, as the publisher focuses more on consumer markets and its market-driven philosophy.
+ The publisher will unveil a new Web site design later this fall, and will introduce a concept known as the "Virtual Church Store." Individual congregations will be able to create their own virtual online church store through the Web, which will connect users to the Augsburg Fortress Web site, Simons said. Virtual church sites will offer a broad range of consumer products. A percentage of the revenue from sales will be shared with the congregation that has an online virtual store, she said.
+ The company celebrated the fifth anniversary of its centralized order and distribution systems. The systems were implemented in October 1995 as part of a series of company-wide changes to provide more timely fulfillment of customer orders. Bruce Keil, vice president of operations, said in a recent survey of customers conducted by a Minnetonka, Minn., firm, 90 percent were either "very satisfied" or "satisfied" with the service they receive. The order system is headquartered in Minneapolis and the distribution center is in Grove City, Ohio.
+ The board adopted a resolution commending Augsburg Fortress' management and staff for their work in implementing the company's strategic plan. The board also suggested an employee appreciation day be designated. ---
Augsburg Fortress' Web site is http://www.augsburgfortress.org.

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