In reviewing financial results for the fourth quarter and fiscal year ended May 31, 2021, Scholastic executives sounded much more optimistic than a year ago. Last year, Scholastic was dealing with one of the worst periods in its history. During the depth of the financial downturn last spring, Scholastic’s fourth quarter revenue tumbled almost 40%, and it had an operating loss of $46 million, compared to operating profit of $32 million in the fourth quarter of fiscal 2019. To compensate for the downturn, the company initiated a number of costs cuts, including reduced work weeks, furloughs, and outright job cuts.

With that as a backdrop, Scholastic reported that revenue in this year’s fourth quarter rose 41%, to $401.4 million, and rather than an operating loss it had earnings of $9.7 million. The fourth quarter improvement was not enough to prevent Scholastic from reporting a 12.5% decline in sales for the year, with revenue dropping to $1.30 billion from $1.49 billion a year ago. Its cost-cutting actions, however, were enough to reduce the company’s loss for the year to $22.7 million, from $88.5 million in fiscal 2020.

Scholastic attributed the decline in revenue last year primarily to lower book fair results both in the U.S. and abroad. In the States, book fair revenue plunged by $219.5 million, 57%, to $164.3 million in the year. While fair revenue jumped 138% in the fourth quarter over last year, company executives acknowledged that it will take some time to fully revive Scholastic's fair operations. In announcing its results, Scholastic said the company “anticipates that rebuilding the book fairs business will take time, given changes to customer engagement and capacity restraints.”

Having said that, Scholastic reported that it expects to see “significant growth” in total revenue in fiscal 2022 as well as improvement in EBITDA (earnings before interest, taxes, depreciation and amortization). In addition to improving book fair sales, Scholastic expects higher revenue to be driven by increases in its trade business—which, it said, will be led by the release of a range of new titles by such authors as Dav Pilkey and J.K. Rowling—as well as the creation of content “which can be further developed” through Scholastic’s entertainment and media properties.

The company also said that, based on its experience from the pandemic, it sees “incremental growth in many of its channels as it builds on the greater involvement of parents globally in purchasing home learning for their children." The company is also accelerating the direct-to-parent marketing of books and educational materials "through improved customer access, digital marketing and e-commerce.”

On the bottom line, Scholastic reported that it expects some of its cost-cutting measures to carry over into the current fiscal year, partially offset by higher compensation costs and the discontinuation of certain Covid-related government subsidies. Given all the uncertainties in the market and economy, Scholastic stopped short of providing actual revenue and profit targets for fiscal 2022, although it added that it expected to provide more guidance later in the year.

Fiscal 2021 Recap

The steep drop in book fairs in the fiscal 2021, coupled with a 7% decline in book club revenue, led to a 24% drop in revenue in Scholastic’s children’s book publishing and distribution business. Revenue fell to $664.7 million, from $875.4 million in fiscal 2020. The division’s trade business had a good year, with sales up 6%, to $355.3 million.

In Scholastic’s other operating divisions, revenue rose 9% in the year in its education group, to $312.3 million. Revenue in its international operations was flat, at $323 million.

The financial results were the first reported since the June death of Scholastic chairman, president, and CEO Dick Robinson. Peter Warwick will take over as CEO and president in August.