As the impact of the Covid-19 pandemic forced schools to close beginning in March, sales at Houghton Mifflin Harcourt began to cool, leading to a 2.4% drop in revenue, to $189.9 million, for the quarter ended March 31, 2020, compared to last year’s first period, the company reported. The publisher had an operating loss of $338.2 million in the quarter, up from $101.8 million in the first period of 2019. The most recent loss includes a one-time charge of $262 million which HMH said was “a direct result of the adverse impact that Covid-19 has had on the company.”

To offset the decline in sales, HMH initiated a number of cost-saving measures in late March, which included the imposition of a four-day work week across the company, stopping all discretionary spending, and temporary closures of warehouses and distribution centers. No time has been given for when a full work week will be restored. Despite the expense reductions, HMH said it expects that its businesses will be “severely impacted” by Covid-19 in the second quarter ending June 30.

While it is difficult to predict when and how fast business will improve, HMH said its current assumptions are “that businesses will reopen for selling and school districts will gradually resume purchasing during the second quarter of 2020, and most or all will become fully operational, either in-person or virtually, by the third quarter of 2020.” The company said that tests that it has conducted show that it has enough resources to meet its financial requirements for the next 12 months.

In a statement, CEO Jack Lynch said HMH expects that the back-to-school period will "drive meaningful demand,” adding that HMH believes the pandemic “will accelerate the market move to a 1:1 student to device ratio, and drive deeper investment in remote learning solutions.” HMH, he said, “is positioned to lead this shift with a digital-first offering for connecting teaching and learning, affording a new opportunity to empower teachers and bring together all members of the learning community.”

HMH's education group had revenue of $151.6 million in this year's first quarter, down 1.5% from the first period of 2019. Sales at HMH Books & Media fell 6% in the first quarter, to $38.3 million. The division had an net loss of $2.8 million, down from $4.5 million in the first quarter of 2019. HMH said the sales decline was due primarily to licensing revenue it received in last year’s first quarter from Carmen Sandiego, as a result of the Netflix series based on the property. HMH said it expects to receive new licensing payments later this year. Bright spots in the quarter included a sales increase for books in the Little Blue Truck series as well as good performances for the frontlist titles Chosen Ones and Maybe You Should Talk to Someone.