Scholastic revenues down 13% in first financial quarter reflecting ‘retail softness’

Scholastic revenues were down 13% in the first financial quarter ending 31st August 2023 compared to the same period last year, “partly reflecting continued retail softness, which impacted Trade sales in the US and major international markets, as well as the timing and seasonality of sales in Education Solutions” the publisher said.

Revenues for the quarter stood at $228.5m (£186.2m) compared to $262.9m (£214.2m) in 2022, while the company also reported an operating loss of $99.1m (£80.7m) in the quarter, compared to a loss of $58.1m (£47.3m) a year ago. Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) were a loss of $70.6m (£57.5m).

The report states: “As expected, greater seasonal losses were primarily driven by lower sales in the Trade division and Education Solutions segment, continued investment in strategic initiatives and planned spending ahead of expected growth in the School Reading Events business”, and that “the company typically generates an operating loss in the first quarter, when schools are not in session".

Peter Warwick, president and chief executive officer, said: “Building on a strong end to fiscal 2023, Scholastic made solid progress this summer, implementing our newly integrated School Reading Events strategy while optimising and investing in other areas of our business for long-term growth. As expected, the first quarter’s operating loss grew from a year ago, reflecting this spending as well as the timing and seasonality of sales in our Education Solutions division.”

He added that the organisation has a “strong plan” for book fairs this year, announcing “we are strategically transitioning book clubs to a smaller, more profitable core supporting future growth in School Reading Events.” Warwick said that in the Trade division last quarter, the publisher had multiple frontlist bestsellers, including This Winter by Alice Oseman, The Bad Guys® #17 in Let the Games Begin! by Aaron Blabey, The Official Harry Potter Cookbook and The Ballad of Songbirds and Snakes in paperback.

“These helped partly offset lower backlist sales, reflective of the overall retail bookselling market, which continued to revert to pre-pandemic sales levels,” he said. “Looking ahead at the fall and spring, we are excited about new Dog Man, Cat Kid Comic Club, and Heartstopper titles, among others, plus the release of The Harry Potter Wizarding Almanac. We also expect the release of the new Goosebumps® TV series on Disney+® and Hulu® to introduce our beloved book series to a new generation of readers.”

Warwick said that first quarter Education Solutions sales were lower year over year, “as expected”, reflecting the “shifting seasonality of this business and the timing of revenues from state-sponsored programmes". “We remain positive about the remainder of the year and this compelling long-term growth opportunity, which builds on Scholastic’s literacy-focused mission, strong position in schools and industry-leading literacy and reading offerings,” he said.

“Looking ahead, we’re excited about fiscal 2024 and are affirming guidance. As it has for over a century, the back-to-school season represents another opportunity for Scholastic to help address the critical need for literacy, reading and stories, as we advance our strategy for growth, impact and shareholder value creation.”