Scholastic Touts Core Business Strength

by Jim Milliot -- Publishers Weekly, 3/27/2008 7:16:00 AM

After previously announcing that it was putting its home continuity business up from sale, Scholastic took a $72.7 million writedown in the third quarter ended February 29 to account for that move, resulting in a net loss of $82.1 million in the quarter. Revenue rose 2.2%, to $458.4 million. Excluding the writedown, the loss from continuing operations was $4.6 million in the quarter compared to last year’s third quarter loss of $3.8 million.

Scholastic chairman Dick Robinson said the company’s core businesses had a “solid” third quarter. Revenue in the children’s book publishing & distribution segment fell 4%, to $229.7 million, although operating income rose to $10.2 million from $9.3 million. Revenue fell 8% in the group’s book club unit, reflecting fewer orders due to the elimination of unprofitable mailings, helping to give the clubs higher sales per order. Sales at book fairs increased 7%, to $78.3 million, due to more fairs and higher sales per fair. Revenue in the trade group rose 9%, to $47.3 million thanks to continued sales of Harry Potter and the Deathly Hallows (released in July) and Potter box-sets. School continuity sales fell 49%.

In its other segments, educational publishing sales rose 5%, to $78.1 million, led by growth of print products as sales of educational technology were flat. International group sales, helped by currency exchanges, rose 18%, to $108.6 million with sales and profit growth in the U.K. and Australia partially offset by declines in Canada. Sales in the media, licensing and advertising group increased 3%, to $42 million.

For the nine months, revenue in the children’s publishing & distribution group jumped 30%, to $933 million led by the trade division where Deathly led a 170% increase, to $381.7 million. Total revenue at Scholastic rose nearly 20% in the nine months, to $1.70 billion, and the company had a net loss of $9.3 million, including the $72.7 million writedown. Earnings from continuing operations rose 165%, to $78.8 million. Scholastic expects revenue for the full year ending in May to be between $2.2 and $2.3 billion.