The review and restructuring of its continuities business will result in a $25-million writeoff in Scholastic's fourth quarter, as well as a $2.3-million charge in this fiscal year's first quarter, the company announced last week. The charge in the fourth quarter will be somewhat offset by an $8-million gain resulting from the termination of a sublease in New York City.
Scholastic said the $25-million charge, which it took in the fourth quarter ended May 31, primarily represented write-downs of inventory from discontinued operations and prepaid promotions costs, as well as small increases in bad debt expense and provisions for returns, and related severance. The $2.3-million charge reflects the elimination of about 20% of the total number of positions in the continuities division, cuts that were made earlier this summer.
Scholastic chairman Dick Robinson said the publisher is "adjusting our business model to strengthen our relationship with our most productive customers." Although the new approach will reduce revenue, Robinson said the actions "will improve customer retention, profitability and cash flow in this strategically important business."
Also last week, Scholastic announced that it has named Kate Wilson group managing director of its U.K. subsidiary. Wilson, currently managing director of Macmillan Children's Books, will join Scholastic September 1. She succeeds Ian Ronald, who stepped down from the top spot at Scholastic U.K. earlier this year.