The loss of 79% of its domestic book fair revenue was the major factor in dropping sales and earnings at Scholastic in its second quarter ended November 31. Total revenue declined 32%, to $406.2 million, in the quarter, and operating income fell 54%, to $48.8 million.
Fair revenue fell from $224.1 million in the second period ended November 31, 2019, to $47.7 million in the most recent quarter. The revenue decline was due to a significant drop in the number of in-person fairs held in schools because of the Covid-91 pandemic, Scholastic said. The increase in new online fairs was not nearly enough to offset the downturn of Scholastic’s in-person events. The company said it is hopeful that “after a ramp-up period in the third fiscal quarter,” overall results, and especially the fair business, will start to show improvement in its fiscal fourth quarter, which ends May 31, 2021.
Scholastic’s book club business also took a hit in the quarter, but not nearly as bad as fairs. Club sales fell 22%, to $66.9 million. After a slow start in the quarter, club revenue “finished the quarter strong,” Scholastic reported.
The third component of Scholastic’s children’s book publishing and distribution group, trade books, had a good period, with revenue up 21%, to $125.7 million. Scholastic said sales were up across the board with sales of frontlist, backlist, digital, audio, co-editions, and Klutz activity kits all increasing.
Quarterly sales in the education group fell 3%, to $67.5 million, predominantly due to lower custom publishing revenue as Scholastic winds down that business. Sales of Scholastic’s traditional classroom book collections and magazines fell, but sales of its take-home book packs to school districts and community-based services were “robust” in the current quarter,” Scholastic reported.
International sales fell 13% in the quarter, mainly due to lower book fairs in Canada and the U.K. Lower direct-to-home sales in Asia were also a factor in the drop.
Scholastic said cost savings measure initiated in the quarter, which cut expenses by $69.5 million, helped to soften the company’s profit decline. To account for its downsizing efforts, Scholastic took a $3.9 million in pre-tax severance charges in the quarter.
New Top Executives Appointed
Yesterday, Scholastic also announced the appointment of Rose Else-Mitchell as president of education solutions, and Beth Polcari as president of international. In their new roles, Else-Mitchell will lead the company’s newly-forming Education Solutions group, and Polcari will lead Scholastic international business operations in the U. K., Australia, and New Zealand, Asia, and export. Both start their new jobs January 1 and will report to Scholastic chairman, CEO, and president Dick Robinson.
Polcari is currently executive v-p and president of Scholastic Magazines Group, and will succeed Nelson Hitchcock as head of the international division upon his retirement at the end of the year.
Else-Mitchell is rejoining Scholastic in her role in the education solutions group, which will combine Scholastic’s classroom magazines, digital subscriptions, and teaching resources units. According to Scholastic, over the next six months, Else-Mitchell will work with current Scholastic Education president Greg Worrell and Polcari to combine their existing two divisions into a single Education Solutions group, which Else-Mitchell will lead effective June 1, 2021. Worrell will continue to advise on strategic partnerships until his planned retirement after 30 years in December 2021.