Educational Development Corp.’s rapid revenue growth stalled in the second quarter ended August 31, 2018, but the company still posted earnings growth of nearly 44%.
Earnings in the quarter jumped to $1.5 million from $1 million in the comparable quarter in fiscal 2018. Sales rose 2%, to $24.7 million, over last year’s second period.
EDC chairman Randall White attributed the big profit gain to improved efficiencies in its warehouse operation. “During the past two years, we have added automation to our picking and packing processes, which has greatly increased our daily shipping capacity and reduced our warehouse labor man-hours,” White said in a statement. “We are pleased to see continued impact of our increased daily shipping capacity as we enter the fall.”
The company’s direct sales division, which has been responsible for EDC’s extraordinary revenue growth over the last few years, saw sales fall to $22.1 million from $22.2 million a year ago. At the beginning of the calendar year, EDC reopened its school and library division, and White said the sales decline was due primarily to more orders associated with schools and libraries, which receive a bigger discount, less transportation revenue, and a smaller sales commission than other direct sales orders. “We are excited to see the growth in these order types,” White said.
Sales in EDC’s publishing division grew 32% in the quarter, to $2.6 million, due to the return of sales gains at some of EDC’s larger retail accounts whose sales had declined over the past year.
"We continue to be optimistic about the potential growth opportunities of [the direct division] and also within the publishing division as the retail market continues to reinvent,” White said in a statement.
For the first half of fiscal 2019, earnings increased 43.4% over the comparable period in fiscal 2018, to $3.3 million, while sales increased 10.7%, to $72 million.