Scholastic is the world’s largest publisher and distributor of children’s books and is the leading operator of school-based book clubs and book fairs in the United States. The company was founded in 1920 as a classroom magazine. Scholastic distributes its products and services through these proprietary channels, as well as directly to schools and libraries, through retail stores and online, and is divided into three segments: Children’s Book Publishing and Distribution; Education (formerly titled Classroom and Supplemental Materials Publishing); and International. This three-part structure is a result of the sale of its educational technology and services business (formerly the Educational Technology and Services segment) and the restructuring of the businesses formerly included in the Media, Licensing and Advertising segment.

Scholastic and its subsidiaries compete in more than 165 countries and publish books in 45 languages.

Analysis & Key Developments

Financial

Scholastic announced an increase in total revenues for fiscal 2016 of 2% to 1.7 billion USD, compared to 1.6 billion USD during 2015. Excluding the impact of foreign exchange, revenue increased by 5%. Scholastic’s operating income increased by 20 million USD to 175 million USD in 2016. Overall Scholastic delivered significant growth in the Children’s Book Publishing and Distribution and Education segments and grew in the International segment in local currency terms. As Richard Robinson, chairman, president and the companies CEO, stated: "Our strong fiscal 2016 results, including double-digit growth in operating income for the year, demonstrate the success of our strategy to closely align the children's book and education businesses globally to serve the changing needs of our educator, parent and child customers.”

The Children’s Book Publishing and Distribution segment includes school book clubs, school book fairs, trade publishing, and other media. The segment’s revenues totaled 1 billion USD during 2016, an increase of 44 million USD over the prior year. The segment generated the largest share of the company’s revenues for fiscal 2016 with 59.9%.

The Education segment (previously Classroom and Supplemental Materials Publishing), which continues to be a key growth area for Scholastic, experienced higher revenues in 2016. The revenues totaled 298 million USD against 274 million USD in the prior year, an 8% improvement compared to the results in 2015.

The International segment again experienced a drop in revenues from 401 million USD to 372 million USD in 2016. The decline was primarily due to the strength of the U.S. dollar, while sales of local titles in Australia saw an increase. Overall the segment’s revenues amounted to 22.3% of fiscal 2016.

Internal Organization

In May 2017, Scholastic announced the opening of a new branch in Bogota, Colombia. Due to this the company expects to increase the reach of the literacy and mathematics solutions provided by Scholastic for students and educators in K–12 schools throughout Latin America.

During April 2017 the company announced the launch of Leveled Bookroom 4.0, a comprehensive literacy resource for grades K–6 that combines high-quality, leveled books with print and digital instructional materials to support educators.

International

Scholastic is persent in the United States, Canada, the United Kingdom, Australia, New Zealand, Ireland, India, China, Singapore and other parts of Asia and sells products in more than 165 countries through its export business.

Bestsellers

Bestsellers during fiscal 2016 included the Harry Potter series, the Minecraft handbooks, the Hunger Games trilogy, and other series such as I Survived, Spirit Animals, Wings of Fire, Amulet, Whatever, Star Wars: Jedi Academy; The Baby-Sitters Club; Captain Underpants; and titles such as Pam Munoz Ryan's Echo, Brian Selnick's The Marvels and Raina Telgemeier's titles Sisters, Drama, and Smile. The company stated that an inability to obtain and publish bestselling new titles in 2016 such as Harry Potter and the Hunger Games trilogy could cause future results to decline in comparison to historical results.

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