Scholastic's focus in fiscal 2006 will remain on expanding margins while growing revenue, company chairman Dick Robinson told analysts in a conference call discussing the publisher's results for the year ended May 31. The company's operating margin in fiscal '05 was 6.5% as operating income rose 11%, to $134.9 million, despite a 7% decline, to $2.08 billion, in revenue.

To improve results in children's book publishing and distribution, which had a 15% decline in sales last year to $1.15 billion, Robinson said the company is viewing the segment "as a whole" rather than as individual units. The company is investing more in technology, both in the development of new products and to get better customer information. Sales via the Internet, mainly in its book club and book fairs divisions, hit $240 million last year, and Robinson expects that figure to continue to grow. In addition, Scholastic hopes to lower costs by better leveraging its distribution scale.

The decline in children's book and distribution segment sales last year was due mainly to a 44% fall in trade sales, which dropped to $181 million. Sales in continuities fell 26%, to $212 million, as the company continues to focus on more profitable products. Book club sales fell 2%, to $397 million, while book fair sales increased 5%, to $363 million.

In its other segments in fiscal '05, sales in education rose 10%, to $404.6 million. International sales increased 5%, to $389.7 million, though excluding currency fluctuations sales were flat. Sales in media and licensing slipped to $133.1 million from $136.4 million.

For fiscal 2006, Scholastic projects revenue to be in the $2.3 billion to $2.4 billion range.