The negative impact of foreign exchange was a key factor in dropping revenue at Scholastic in the second quarter. For the period ended November 30, compared to the same stretch a year ago, revenue fell to $601.8 million, down from $611.1 million. Excluding the impact of foreign exchange, sales would have been $619.0 million. Net income fell to $64.9 million, from $68.5 million.

With the softer than expected second quarter, Scholastic lowered its financial guidance for the full year, predicting that total revenue will be about $1.65 billion, down from approximately $1.7 billion. Earnings per diluted share from continuing operations is forecast to be approximately $1.35, down from a range of $1.35 to $1.55 (before the impact of one-time items associated with cost reduction programs or non-cash, non-operating items).

Within its operating units, revenue in the children's book publishing and distribution group rose 1% in the quarter, to $414.0 million. In the group’s trade division, revenue of $61.7 million was flat with the quarter a year ago; a 7% increase in sales in the trade publishing unit was offset by a decline in revenue from Scholastic's media and entertainment operations.

Among the titles that sold well in the quarter were Star Wars books, the illustrated edition of Harry Potter and the Sorcerer’s Stone as well as the Harry Potter Coloring Book. Sales of Goosebumps titles benefited from the release of the movie.

In the school book fairs division, revenue increased 6% to $231.3 million; this rise reflected both higher revenue per fair, as well as an increase in the number of fairs held. Book club sales fell 7% in the quarter, to $121.0 million, due to later school openings and lower Minecraft handbook sales, Scholastic said.

In the International group, which was hit hardest by the foreign exchange, revenue in the quarter was down $115.7 million, from $132.6. In addition to the unfavorable foreign exchange translation of $17.2 million, an Ontario school labor action also hurt the bottom line. While operations in Australia, the U.K. and India grew in local currency terms, these gains were more than offset when converted to U.S. dollars, Scholastic said.

Revenue in the education segment increased 3%, to $72.1 million. The increase was thanks to a higher circulation in classroom magazines, which now exceeds 14.5 million subscriptions. The uptick in revenue was also buoyed by a strong performance from the company's custom publishing programs, as well as higher demand for the teaching resource workbooks.

In addition to releasing its second quarter results this morning, Scholastic also announced that its board of directors has authorized the repurchase of up to $200 million of the company's common stock through a modified "Dutch auction" tender offer. Through this auction, owners of Scholastic common stock will have the opportunity to tender some or all of their shares at a specified price range (which is to be determined). Scholastic said it plans to begin the auction before the end of the calendar year.

Scholastic also said it plans to begin leasing some of the lower floors in its company-owned New York City headquarters, to generate rental income.