Revenue at Scholastic rose 1.5% in the second quarter ended November 30, to $623.2 million, and net income declined to $58.3 million from $61.8 million in the second quarter of fiscal 2013. Earnings in the most recent period include $13.4 million in impairment charges related to old acquisitions and one-time expenses of $5.5 million tied to cost reduction and restructuring programs.
Sales in the quarter were up in three of Scholastic’s four domestic operating groups and fell in its international operation due in part to currency fluctuations. In the children’s book publishing and distribution group, revenue rose 1%, to $352.1 million, as trade sales increased 3% driven by demand of core backlist titles including The Hunger Games and Harry Potter and the recently released multi-platform SPIRIT ANIMALS. Book fair revenue increased 3%, reflecting higher revenue per fair compared to the prior year period, Scholastic said, while sales at book clubs fell 3%.
In its educational technology and services segment revenue in the quarter increased 17% to $60.9 million, primarily due to higher sales of educational technology products including System 44, Next Generation, MATH 180, Common Core Code X and iRead. The classroom and supplemental materials publishing group also had a good quarter with revenue up 11% to $59.1 million, driven by sales of guided reading and other classroom book collections and higher circulation in classroom magazines. During the quarter, Scholastic combined the operations of the two groups in an effort to give the company’s sales reps “a significantly expanded suite of programs and services” that will help schools improve students’ reading and math skills, company chairman Dick Robinson said.
In the media, licensing and advertising segment, revenue fell 9%, to $15.5 million. International group sales fell 6% primarily due to an unfavorable foreign exchange impact that was partially offset by strong performance in Asia, where revenues rose by approximately 19%, before the impact of foreign exchange.
With revenue down 0.8% and net income off tk in the first six months of fiscal 2014, Scholastic said it affirmed its fiscal 2014 outlook for total revenue of approximately $1.8 billion and earnings per diluted share from continuing operations in the range of $1.40 to $1.80, before the impact of one-time items associated with cost reduction programs or non-cash, non-operating items. The company also said it has decided to buy its New York City headquarters building for $255 million.
