Revenues down 4% for Scholastic in second quarter

Revenues decreased by 4% year on year to $562.6m (£441m) in Scholastic’s latest set of quarterly results, ending 30th November 2023. 

This was primarily a result of “reduced, more targeted promotional spending and the elimination of unprofitable orders in Book Clubs, as the channel is repositioned to a smaller, more profitable core” the publisher said. 

Operating income was $101.3m (£79m) in the quarter, an increase of $1.2m (£941,000) from $100.1m (£78.5m) a year ago. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased by $1.7m (£1.3m) to $124m (£97m). Scholastic said profits improved “reflecting lower promotional spending and improvements in inventory product and freight costs, which more than offset the impact of lower sales in Clubs”. 

Peter Warwick, Scholastic president and c.e.o., said: “During the seasonally important, back-to-school second quarter, Scholastic delivered again on its mission and long-term opportunity as we face a currently complex environment in US schools.” 

In October the publisher came under fire for its decision to separate certain book titles in school fairs in the US by race, gender of sexuality, allowing districts to opt in or out of the catalogue, called Share Every Story, Celebrate Every Voice. The separate catalogue was a response to pending and enacted book bans in the US and did not ship automatically with book fair orders, but was available as an add on. Scholastic has since apologised and said it will discontinue its separate books programme. 

Warwick continued: “School Book Fairs achieved higher fair count and solid second-quarter sales, and we began the process of strategically repositioning our School Book Clubs as part of the integrated School Reading Events business. Education sales remained stable, reflecting Scholastic’s unique ability to support literacy by providing children access to engaging book collections through our state and district partnerships. We also continued to invest in our strategy to drive long-term growth and shareholder value. We returned over $58m to shareholders through share buybacks and our dividend.” 

“Cat Kid Comic Club: Influencers by Dav Pilkey, the interactive edition of Harry Potter and the Prisoner of Azkaban, The Harry Potter Wizarding Almanac, and the new paperback edition of The Ballad of Songbirds and Snakes, Suzanne Collins’ prequel to the Hunger Games series, all dominated bestseller lists last quarter, evidencing Scholastic’s leading position as a provider of children’s and young adult content. The new live-action Goosebumps TV series on Disney+ and Hulu also performed very well since its October launch. Co-produced by Scholastic Entertainment, it is based on the classic Scholastic series, which has sold over 400 million copies. Looking ahead, we are positive about our publishing plan for the remainder of the fiscal year.” 

He explained that second quarter results “came in below expectations for profit growth… largely reflecting lower than forecast participation and spending in our School Reading Events division, which we expect to continue for the remainder of this school year.  

“As a result, we are adjusting our fiscal 2024 guidance as we take steps to target additional revenue opportunities and align spending in the second half of this year. Overall, last quarter’s results reinforce our conviction in Scholastic’s long-term growth outlook – as we continue to build on our unique strengths as the world’s largest and most trusted children’s publisher and distributor – and our commitment to continue deploying capital to invest in growth and enhance shareholder returns.”