Profits Jump 27% in Scholastic's Children's Publishing Group
By Jim Milliot -- Publishers Weekly, 9/3/2001
Scholastic's children's book publishing and distribution group was the company's big moneymaker in the fiscal year ended May 31, 2001, generating operating profits of $217.0 million, a gain of 27.2% over fiscal 2000. As previously reported, the group had sales of $1.22 billion last year, an increase of 42.4% over fiscal 2000. The main driver in lifting both sales and profits was the trade division, which had a 43.8% sales gain, to $321 million, according to Scholastic's 10-k filing with the Securities and Exchange Commission. In addition to $190 million in revenues from the Harry Potter titles, good gains were reported from sales of Clifford, Captain Underpants, Dear America and I Spy.
Revenues in the group's largest division, school book clubs, rose 2.3% to $329 million. The modest increase was attributed to lower revenue per order, due in part to lower Pokémon sales, which offset higher orders. With the addition of Grolier's direct-to-home business, continuities now are the children's publishing group's third largest segment, with revenues of $302 million. School book fair sales rose 14.3%, to $267 million, due to more fairs and more revenue per fair, and the introduction of the Reading Jamboree subscription program.
Despite the large jump in sales and earnings, the group's operating margin fell to 17.8% from 19.9% in fiscal 2000, which Scholastic attributed to the growth of lower-margin direct-to-home sales.
In Scholastic's other operating groups, education publishing had a loss of $57.0 million in the year because of the $72.9-million charge the company took to discontinue its Literary Place line. The group, which would have an operating profit of $15.9 million excluding the charge, had a loss of $13.3 million in fiscal 2000.
The media, licensing and advertising group had an operating loss of $23.0 million on sales of $134.0 million. The loss was due to operating expenses associated with Scholastic.com; excluding the online costs, the division would have been at break-even in both fiscal 2001 and fiscal 2000, when the unit lost $11.9 million.
Operating income in the international group jumped 92%, to $19.0 million, while revenues rose 32.5%, to $296.7 million. The profit improvement was due to strong Canadian and export results combined with an $8.4-million contribution from Grolier's international operations. Earnings were down in Australia and the U.K.
