Citing lower than expected sales in its Educational Technology and Services segment, as well as in its book fair and book club businesses, Scholastic significantly cut its earnings estimate for the fiscal year ending next May. While the projection for revenue has been cut to $1.8 billion to $1.9 billion from early projections of $1.9 billion to $2.0 billion, the earnings per share estimate was slashed to a range of $1.40 to $1.60 per diluted share from $2.20 to $2.40 per diluted share.
Scholastic said the lower sales in its education technology segment was due to school districts diverting funds to train teachers ahead of the implementation of the Common Core State Standards plus delays in purchasing technology products due to federal budget uncertainties. While book club sales overall have been lower than expected, sales of clubs and book fairs in the Northeast have been especially hard hit because of Superstorm Sandy. Sales of the Hunger Games trilogy have also slumped greater than expected.