With sales falling in all three of its major operating groups, total revenue fell 8.1% at Scholastic in the third quarter ended February 28, compared to the third period of fiscal 2016. In the most recent quarter revenue was $336.2 million, down from $366.0 million last year. Scholastic also reported a $15.4 million net loss in the quarter, up from a $9.0 million loss a year ago.
In addition to lower sales, Scholastic attributed the higher loss to continued investment in upgrading its back office operations. The technology investments, Scholastic said, are designed to enable it to better utilize market data, simplify and standardize business processes across divisions, communicate with customers, and "share in common investments for the benefit of all business groups.”
While corporate overhead rose due to costs associated with the technology upgrades, Scholastic also took a $4.4 million severance charge in the quarter, $3 million higher than in last year’s third period.
In the company’s children’s book publishing and distribution group, total revenue fell 9% in the quarter, to $199.0 million. The drop in revenue reflected a 17% decline in book club sales, a 14% drop in trade sales, and a 1% decline in book fair revenue.
Scholastic, which had seen solid business with its line of Harry Potter coloring books, said trade revenue was hurt, in part, by "a significant decline in adult coloring book sales.” The big decline in book clubs sales was attributed to lower orders and reduced sales of media titles.
Revenue in Scholastic’s education and international groups fell by 6% in the quarter in each unit.
Despite the weak third quarter, total revenue for the first nine months of fiscal 2017 was up 7.1%, to $1.24 billion, while net income was at $12.9 million, up from $6.5 million in the first nine months of fiscal 2016.
CORRECTION: This article previously misidentified a decline in book clubs sales as "book fair sales."
