Scholastic Results Off, Focus On Cost Cutting
By Jim Milliot -- Publishers Weekly, 9/25/2008 7:19:00 AM
It’s not easy competing with Harry Potter as Scholastic’s results for the first quarter, ended August 31, show. Without the $240 million contribution from last July’s Harry Potter and the Deathly Hallows, revenue plunged 46%, to $285 million, and the company had a net loss from continuing operations of $44.7 million compared to earnings of $3.3 million in last quarter’s first quarter. Including the loss from discontinued operations, the company had a net loss of $49.1 million in the period. Chairman Dick Robinson said the company’s focus continues to be on cutting costs, an initiative that includes a hiring freeze and a voluntary retirement program for employees over age 50.
In Scholastic’s children’s book publishing and distribution group--the segment most affected by Hallows--sales fell from $296.8 million to $61 million; within the group, sales in the trade segment fell to $40.4 million from $276.9 million. Book fair sales rose 20%, to $12 million, while club sales declined 13%, to $8.6 million (the first period is the smallest quarter for fairs and clubs).
In the educational publishing segment, sales fell 9%, to $116.4 million, due to lower sales of its READ 180 program. International sales were off 2%, to $88.1 million, which the company attributed mainly to lower export sales of Hallows. Higher sales from custom publishing resulted in a 19% increase in the media/licensing/advertising segment, with sales hitting $19.5 million.
Scholastic still expects sales for the full year to be in the $2.0 to $2.1 billion dollar range with solid margin growth--excluding Potter
