Net income for the first quarter ended May 31, 2021, jumped 79% over the comparable quarter in fiscal 2021 at Educational Development Corp. Earnings rose to $3.4 million, up from $1.9 million a year ago. Revenue increased 6.5%, to $40.8 million.
EDC CEO and president Randall White sought to put the focus on the big increase in earnings over the smaller sales gain. The increase in earnings in the quarter, he said, was due to a number of changes the company made in the fourth period, including lowering its shipping costs on individual packages and receiving increased discounts on printing because of longer print runs. These, and future improvements, should make the company more profitable, White said.
White called the 6.5% increase in revenue a good performance, given that EDC had seen huge sales spikes for most of last year as parents sought out educational material for their children. He noted that last year's sales gains came despite the absence of about $30 million in business from school book fairs and sales through booths at events, which were closed because of the pandemic. White said he expects most of that $30 million to return this year as restrictions on those businesses have ended.
White fought back against the idea that EDC's 81% jump in sales in fiscal 2021 was due only to pandemic-induced buying, arguing that the large increase in new in-home sales reps was a key factor for the growth. EDC had about 55,000 sales reps in the most recent quarter, up from roughly 30,000 a year ago.
EDC's stock price has not done well in 2021, falling 19.2% in the first six months of the year. Its share price was $12.41 per share on June 30, and closed at $12.53 July 8.
While sales in EDC’s direct sales division rose only 1.9% in the quarter, to $37.6 million, sales in the much smaller publishing division jumped 128%, to $3.2 million. The increase was due to a “resurgence” in sales through retail stores, EDC said.
White said he remains confident that EDC will finish fiscal 2022 with higher sales and profits.