The Reader’s Digest Association posted a loss for its financial first quarter as sales tumbled 9.8%, but promised that Q2 would be substantially better, lifting its stock 13%.

For the three months ending September 30, the company booked a loss of $1.1 million, compared to $22.3m profits twelve months previously. Sales fell from $551.5m to $497.5m, which the company blamed on changes to the way its sweepstake rules are disclosed and a decline in advertising – which accounts for 8% of sales – following September 11.

However, it forecast earnings of 75–80 cents per share for Q2. Although advertising is still expected to be weak, sales are expected to increase from divisions such as gift and book retailer Books are Fun.

“We gave a relatively rosy outlook for our fiscal second quarter, because we're one month into it, so we have some results,” commented chief executive Thomas Ryder. “Unless there is major change in world events, we believe we will perform better than the [Wall] Street expects.”

News source: New York Times