After Great Year, Scholastic Tries For Encore

Fiscal 2012 was a good year made great by The Hunger Games,” Scholastic chairman Dick Robinson told analysts in a conference call last Thursday to discuss results in the year ended May 31, in which sales rose 14%, to $2.15 billion, and net income jumped from $39.4 million to $102.4 million. The big sales driver was the children’s book publishing and distribution group, where sales rose 21%, led by the 109% increase by the trade division, which reported that there are now more than 50 million copies of the Hunger Games trilogy out in print and digital editions.

For a good portion of the call, Robinson and other Scholastic executives discussed Scholastic’s future and tried to assure analysts and investors that despite a dip in results in fiscal 2013, results will grow again in 2014. Robinson acknowledged that without the lift provided by the film, sales of Hunger Game titles will return to “pre-movie levels.” A strong frontlist will help to somewhat offset the Hunger Games decline (though the trade segment is expected to have a double-digit drop in sales), and improvement in the performance of its book fairs will result in a decline in children’s book publishing and distribution group profits, but those earnings will be above fiscal 2011 levels, CFO Maureen O’Connell said.

Scholastic will continue to invest in digital initiatives in fiscal 2013, Robinson said, including more investment in Storia, its e-book platform. The company is gearing up to do more Storia promotions this fall, and Robinson noted that included among the 2,000 e-books that will be available from Storia will be Harry Potter titles. But similar to Amazon, which is providing access to the e-books through Pottermore but not selling the books, Storia will provide a link that will allow customers to buy the e-books from Pottermore and those e-books can be read in the Storia app. Robinson said that despite expanding Storia to more teachers and families this fall (through both its fairs and clubs), Scholastic doesn’t expect the product “to drive significant revenue until fiscal 2014 at the earliest.”

Overall, Scholastic believes total revenue in fiscal 2013 will be between $1.9 billion and $2.0 billion, with net income per share of $2.20 to $2.40 (earnings per share were $3.41 last year).

Scholastic Results, 2011–2012 (in millions)