First quarter sales for the period ended August 31 fell 7.8% at Scholastic, to $290.9 million, and the net loss increased to $35.2 million from $23.0 million in the comparable quarter in fiscal 2010. Despite the results, the company said it remained on track to meet its earlier forecast of total sales for fiscal 2011 of between $1.9 and $2.0 billion and earnings per share from continuing operations in the $1.95 to $2.20 range.
Sales in the period fell in Scholastic’s two most important segments, children’s book publishing & distribution, and educational publishing. Revenue in the publishing & distribution group fell 4%, to $72.8 million. Within the group, trade sales increased 9%, to $54 million, led by sales of Mockingjay and the final book in The 39 Clues series. Book club sales increased 18%, to $9.7 million, and fair sales fell 51%, to $9.1 million. In prepared remarks, Scholastic chairman Dick Robinson noted that without schools in session, the clubs and fairs generate minimal revenue in the first quarter and said early customer metrics for both are positive. During the quarter, Scholastic rolled out its online book club platform for teachers and parents and moved forward to launch a children’s e-book service by the end of the year.
Sales in the education group declined 20%, to $118.6 million, mainly due to a decline in technology sales and READ 180. Last year, the division benefitted from federal stimulus funds that were used to buy the products. Despite the decline, Robinson said that with Race to the Top and School Improvement grants coming as well as higher service revenue the division is still expected to post full-year sales levels close to that of fiscal 2010.
In its other segments, international revenue rose 8%, to $81.9 million, helped by favorable currency exchange, and higher sales in Australia and Canada. Sales in the media, licensing and advertising group rose 2.5%, to $17.6 million, driven by higher revenue at Scholastic Entertainment and higher audiobook sales led by Mockingjay.
Separately, Scholastic announced that its board has authorized a modified "Dutch Auction" to repurchase up to $150 million of the company's common stock. Under the terms of the proposed offer,Scholastic shareholders can tender some or all of their shares at a price within the range of $27.00 to $31.00 per share. Based upon the number of shares tendered and the prices specified by the tendering stockholders, Scholastic will determine the lowest per share price within the range that will enable it to buy $150 million in shares. The company's share price closed at $25.51 yesterday.