Sales and earnings fell in the first quarter ended August 31 at Scholastic, but the publisher said it still expected to meet its financial projections for the full fiscal year. In the quarter, sales declined 7.7%, to $293.6 million, and its net loss increased to $32.1 million from $27.1 million in the comparable period in fiscal 2012.
Sales dropped in three of five of Scholastic’s operating groups, including the children’s book publishing and distribution group were sales fell 8.2% to $71.1 million. Within the group, sales in the trade division fell 11%, to $53.1 million, reflecting lower sales of Harry Potter compared to a year ago when the final movie in the series was released partly offset by strong sales of the first book in the Infinity Ring series, as well as the latest Captain Underpants title from Dav Pilkey. U.S. sales of The Hunger Games trilogy were level with the prior year period, Scholastic said, though down substantially from the fourth quarter of 2012 when sales of the series in the U.S. peaked. Book fair and book club sales were nominal since schools were not in session during the quarter. Scholastic chairman Dick Robinson noted that during the quarter the company continued to invest in Storia, its children’s e-book system that is officially rolling out this fall. “While still nascent, the children's e-book market represents a major long-term opportunity for Scholastic," Robinson said in a statement.
In the educational technology and services group, revenue for the first quarter was $80.0 million, compared to $96.6 million in the prior year period, due to strong sales of new products in the prior year period as well as lower spending by school districts in the current quarter. Sales fell 17% in the classroom and supplemental materials publishing group with Scholastic attributing the decline to strong orders last year in the Reading Is Fundamental program prior to a cut in funds in the that program and good sales of new products. Both the educational technology and classroom groups also were hurt by weak budgets on the state and national level which has led to a delay in school material purchases.
Internationally, revenue in the first quarter increased to $90.2 million from $87.7 million led by solid growth in the U.K. and Canada, partly reflecting continued strong sales of The Hunger Games, which was partially offset by lower sales in Asia and an unfavorable foreign exchange impact of $4.4 million. Media, licensing and advertising revenue rose to $14.4 million from $10.5 million, primarily as a result of strong audio format sales of The Hunger Games.