Esquire Inc. only sounds like a magazine-publishing company.
Actually the New York-based firm is an example of how a company can prosper by leaving its roots, in this case magazines. With the recession forcing many businesses to explore new ways to produce income, its experience is timely.
Founded as the publisher of a clothing journal, Esquire Inc. was best known for the men's magazine that carried the corporate name. The publication was sold to Britain's Associated Newspaper Group in 1977 to end a drain on corporate profits.
Speaking of the sale, Esquire president Bernard Krauss recalled: ''I felt like someone had taken a big load off my back.'' The company's other magazine, the profitable Gentlemen's Quarterly, was sold in 1979.
Free of magazine losses, Esquire has been going after relatively small markets where it can sell highly profitable products that do not compete with products from bigger companies. Esquire also has boosted profits by buying and revitalizing companies that fit into its three core businesses: textbooks and instructional films, lighting equipment, and sheet music.
The strategy seems to be paying off. Operating revenues have climbed 155 percent since 1977, to $147.1 million. Income from continuing operations has climed 240 percent, to $9.7 million. Meanwhile, return on shareholders' equity has bounced from 10.2 percent in 1977 to 15.8 percent in 1982.
''Esquire's management has done a good job, and should continue to do so,'' says Myron Cohn, an analyst with Herzfeld & Stern, a New York brokerage firm.
Still, Esquire's strategy has not left it entirely immune to financial ups and downs. First-quarter earnings, announced July 15, slipped 6.1 percent, to 77 cents a share. The lighting business was hit by the slumping construction market , and earnings also suffered as a result of the costs of acquisitions made in music- and book-publishing fields.
But Esquire expects results for the fiscal year as a whole to bounce back and reach a record level. ''We expect a very solid increase in earnings'' for the year as a whole, says Jeffrey M. Gold, Esquire's senior vice-president and chief financial officer.
His bullish assessment is shared by others. ''The first-quarter results were surprising. I thought they would be down a lot more than they were. I may have to increase my earnings estimate,'' says Stanley Lanzet, an analyst with Drexel Burnham Lambert Inc. He expects the company to post earnings of $3.30 a share in 1983, up from $2.84 for the fiscal year ending March 31, 1982.
The biggest chunk of profits will come from the company's education group, which last year contributed 49 percent of revenues and 59 percent of profits. Each of Esquire's elementary, high school, and college-textbook publishers tries to search out a highly defined market. For example, Modern Curriculum Press concentrates on phonics programs for elementary grades, while Globe Book Company publishes for slow learners at the junior and senior high school level.
Esquire's acquisition strategy can be seen in its 1981 purchase of Allyn & Bacon, a Boston-based publisher of college and professional texts which had run in the red two years before it was acquired. By cutting staff and overhead, and boosting distribution efficiency, Esquire showed a profit on Allyn's operations the year it was acquired. Larger profits are expected this year.
Analysts say Esquire's text-publishing business is not likely to be badly hurt by cuts in the federal education budget. ''It is really tough for any school district to save much money by cutting book purchases,'' Drexel analyst Lanzet says. He notes that books typically account for about 1 percent of a school system's budget.
Esquire's lighting business has been hit by the downturn in construction. The company's Wide-Lite Corporation specializes in fixtures and electronic-control systems for high-intensity discharge lamps used in parking lots, airports, and building exteriors. In the quarter ending June 30, lighting revenues sagged 18 percent, and income dropped 29 percent.
''We will be watching the lighting group very carefully. If there is softness , we can react with additional marketing plans and cost reductions,'' Mr. Gold says.
While Esquire's music-publishing line is the smallest of its core businesses, it is also perhaps the most recession resistant. ''Mom and Pop will always shell out a few bucks for music if the school doesn't have it,'' Mr. Krauss notes.
Esquire broke into the business in 1979 by acquiring Belwin-Mills Publishing Company, which produces instruction courses for solo instruments, as well as for bands and orchestras. The company's music catalog includes some 30,000 old favorites, including ''Stardust.'' In March Esquire bought Good Life Publications, a publisher of sacred music. Good Life should profit from being able to use the wholesalers and jobbers who handle Belwin-Mills's products.
The company's diverse mix of businesses is especially helpful in a recession, Mr. Krauss says. ''I don't think we can call the company recession-proof. Nothing is recession-proof. But we are recession resistant.''