The absence of Harry Potter and the Order of the Phoenix, which generated sales of $170 million in last year's first quarter, resulted in a big decline in sales and a higher loss for Scholastic in the quarter ended August 31.

Revenue for the company dropped 32%, to $323.7 million, and the net loss jumped to $50.4 million from $24.8 million. The operating loss was slightly lower than expected, and company chairman Dick Robinson said he is "confident that we will meet our plan for 2005." Among those goals are sales of between $2.1 billion to $2.2 billion (down from $2.23 billion) and earnings per share of between $1.50 and $1.70 (up from $1.46).

The children's book publishing and distribution division took the brunt of the decline, with sales down 58%, to $121.8 million.

Within the publishing division sales of trade books plunged to $46 million from $203 million. During the quarter, Potter revenue was $10 million, driven mainly by sales of the paperback edition of Phoenix. Trade sales of non-Potter titles rose from about $33 million in last year's first quarter to $36 million in the most recent period. The improvement was led by higher frontlist sales of series and licensed product. Sales of continuities dropped to $55 million from $65 million as Scholastic implemented its strategy of scaling back operations to focus on more profitable areas. Robinson said the continuity line "will make money on an operating basis" this year; it broke even in fiscal 2004. Sales of book clubs and fairs rose to $21 million from $20 million, and executives said both units should finish on plan for the year.

The educational publishing division had the strongest quarter, with revenue up 12%, to $118.2 million, driven by a 50% sales increase of READ 180. An improved library market helped turn around Scholastic's library unit, which had an 18% increase in sales in the quarter. International sales increased 10%, to $71.8 million, benefiting from $4 million in foreign currency translation and improved results in Australia.

Revenue in the media, licensing and advertising division fell 27%, to $11.9 million, which the company attributed mainly to a change in production schedules. The company's newest show, Maya & Miguel, will begin airing on PBS October 11, and Scholastic will begin publishing tie-in titles next spring. Maya is the first television production developed by Scholastic that wasn't based on an existing book property.

People Moves

Scholastic executives attributed the improvement in non-Potter trade sales in part to better coordination between the company's trade unit and book club and book fair operations. To facilitate that cooperation, Scholastic has promoted Ken Wright to v-p associate publisher. In addition to continuing to direct Scholastic's reference and nonfiction efforts, he will oversee cross-channel communication across the trade, club, fairs and custom publishing divisions. In another appointment, Jazan Higgins has been named to the new post of v-p, publishing director. Higgins, who has been a marketing and editorial consultant to Scholastic for four years, will oversee Scholastic Press, Arthur A. Levine Books, Orchard Books and Blue Sky Press.