Scholastic announced last Thursday that it expects sales and earnings for the fiscal year ended May 31, 2019, to be below previous estimates.

The publisher said it now expects revenue to be about $1.64 billion, down from previous estimates of $1.65 billion to $1.70 billion. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was put at $120 million to $130 million, down from between $160 million to $170 million, with Scholastic noting that the new earnings forecast included a negative impact of $7.7 million due to an accounting change tied to its book fair incentive program, which had not been included in its prior outlook.

Scholastic's stock price fell 9.4% on May 31 following the release of the new financial outlook, closing at $33.09 per share.

Scholastic said the revision to its fiscal 2019 financial forecast was due to two factors: lower than expected book club revenue—largely due to the March implementation of its sales tax collection program in response to the Supreme Court Wayfair ruling—and expenses in its book fair division that proved higher than originally planned, “primarily due to increased incentive-based promotions to address a more competitive environment.” In fall 2017, Follett entered the book fair business, and operated about 2,000 fairs during the 2018-2019 school year.

Editor's note: This article has been updated with corrected information for the revised EBITDA.