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Torstar's Harlequin fails to score on erotica craze, sales suggest

Harlequin novels are pictured at a store in 2006. Harlequin revenues decreased in the first six months of 2013, seemingly unable to capitalize on the 50 Shades of Grey craze.

Louie Palu/The Globe and Mail

Fifty Shades of Grey may have exposed tens of millions of readers to a new world of sexual fantasy, but it seems many of them were only taking a temporary detour down their bookstore's erotica aisle.

The sexually charged trilogy has been on bestseller lists since 2011 with an estimated 70 million copies sold. Publishing executives around the world rushed to publish similar titles, and Canada's Harlequin was well ahead of the pack with a large inventory of already published books and a slate of new arrivals ready for publishing.

"[Has] erotica as a category got a lot more attention?" Harlequin chief executive officer Donna Hayes asked in October. "The answer is definitely yes. We've actually put out probably half a dozen books, which we had in our backlog, which are doing very, very well in U.S. market right now. And we expect to do more of that. So we are hoping that our trends will continue and we will benefit from that."

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Nobody seemed better poised than Harlequin, which has sold 6 billion books to date. But, the anticipated surge in readership hasn't materialized. Revenue dropped 5.4 per cent for the Torstar Corp.-owned publisher in the first six months of the year to $202-million, while operating profits fell 28 per cent to $27.6-million.

"We had anticipated lower earnings at Harlequin," said Torstar chief executive officer David Holland. "But not to this extent."

RBC Dominion Securities Analyst Haran Posner called the slip a "source of disappointment," adding the management thinks it is unlikely things will get much better this year.

The biggest problem has been the publisher's direct-to-consumer offerings, which is basically a book club for interested readers. Harlequin also blamed weak economies in Europe from dragging down international sales (North American retail sales and digital revenue, meanwhile, were largely unchanged from last year).

Part of the 50 Shades phenomenon has been driven by the e-reader – people who may not have wanted the world to know what they were reading can now read the graphic sex scenes in public without anyone knowing what they're up to.

One way Harlequin hopes to entice some new readers into its pages is through a partnership with Cosmo magazine. The recently announced deal will see the publisher crank out two e-books a month.

"The novels, by some of Harlequin's bestselling authors, will have strong narratives centring on modern young women living the free-spirited and outgoing lifestyle espoused by the international magazine," the companies stated in a release.

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