As it warned in November, sales and earnings fell at Scholastic for the second quarter ended November 30, with revenue down 10%, to $616.2 million, and net income off 24%, to $61.8 million. Sales were down in all of the publisher’s operating groups.
Sales in the children’s book publishing and distribution segment declined 11%, to $350.1 million, as softer than expected sales of The Hunger Games led to a 26% decline in trade sales, to $51.1 million, while book club sales fell 21% due to lower revenue per order and school closings after superstorm Sandy. Book fair sales rose 1%. Scholastic noted that since it introduced its Storia app in its fair and club channels, downloads of the app are in line with expectations.
Sales in educational technology and services segment declined 20% as schools slowed their purchases due in part to a shift in resources to professional development training for the new Common Core State Standards. Sales of technology did pick up in November, Scholastic noted. Common Core did benefit Scholastic’s classroom and supplemental materials publishing segment as sales of classroom magazines rose to meet the need for more nonfiction content. That increase was partially offset by a decline in sales to Reading is Fundamental; in last year’s second quarter Scholastic benefitted from “significant nonrecurring contracts” with RIF.
In the international segment, revenue in the quarter was $143.7 million, compared to $144.1 million in the prior year period, primarily reflecting lower sales in Canada that were partially offset by strong performance in Australia and the U.K. and a favorable foreign exchange impact of $1.8 million.
For the first half of fiscal 2013 sales were down 9%, to $909.8 million, and net income was off 44%, to $29.7 million. Company chairman Dick Robinson said Scholastic remains on track to hit its revised guidance while it continues to invest in e-book and e-commerce initiatives and looks to expand in southeast Asia. The company is also beginning to implement cost cutting initiatives aimed at saving $20 million to $30 million for the remainder of the fiscal year