With good gains in both its trade and education businesses Scholastic reported a 5.6% increase in revenue in the third quarter ended February 29, over the comparable period in fiscal 2015. Excluding the negative impact of foreign exchange, sales would have risen more than 8%. The company cut its net loss from $22.1 million in the third period of fiscal 2015 to $9.0 million in the most recent period.
In Scholastic’s children’s book publishing and distribution group, total sales rose 4% in the quarter to $220.2 million. The increase was led by a 27% jump in sales of trade book, to $57.0 million. Scholastic cited strong sales of the full-color illustrated edition of Harry Potter and the Sorcerer's Stone and Harry Potter-themed coloring books as strong sellers in the quarter. Book club revenue rose 4%, to $72.9 million, reflecting higher order volume. Book fair revenue declined 1%, to $90.3 million, due to the shift of some fairs to the fourth quarter, partially offset by higher revenue per fair in fairs held, according to Scholastic.
In the company’s education group, revenue in the quarter increased 17%, to $63.5 million, led by higher sales of classroom books and book collections, as well as print and digital classroom magazines, where circulation now exceeds 15 million.
Sales in the international group fell 4%, $82.3 million, due entirely to the $9 million negative impact of foreign exchange; excluding foreign exchange, international revenue would have increased 6% in the quarter compared to a year ago. Scholastic said Canada, Australia and the U. K. showed year-over-year growth “on the strength of local trade publishing and book fairs. Asian operations were on par with prior year's results in local currency terms.”
In prepared remarks, Scholastic chairman Dick Robinson said that given the company’s strong performance in the children’s trade area, Scholastic will up its investment in the business, a move that will lower free cash flow for the full fiscal year. The company expects to incur higher costs for new licensed properties, as well as royalty advances for new titles and authors.