A $8.2 million reduction in its inventory levels allowed Educational Development Corp. to post net earnings of $546,000 for the fiscal year ended February 28, 2024, compared to a loss of $2.5 million in fiscal 2023. Sales at the company tumbled 42%, to $51 million, from $87.8 million a year ago.
CEO Craig White said that EDC’s continues to prioritize cash flow over profitability as the company works to cut its bank debt. During the year, EDC did manage to reduce its bank borrowings from $45.7 million to $33.9 million. The company took on high debt to fund an expansion following an extraordinary sales boost during the early months of the pandemic, when sales hit a record high of $204.6 million in fiscal 2021. The gain was driven by a combination of parents looking for educational books for their children during school closures and a spike in the number of at-home sales reps, which topped 50,000 as parents looked to earn money when other businesses were closed. Since that spike, sales have declined every year, the number of sales reps—now called PaperPie Brand Partners—dropped to 15,500, and EDC has overhauled its operations to operate at a much smaller company. In addition, EDC lost the rights to distribute the Usborne book line to retail accounts, an important factor in a 59% drop in sales in its publishing unit in the year. Sales in its much larger PaperPie division dropped 39%.
White said EDC continues to face economic challenges, particularly high inflation, which has reduced the discretionary income of its main audience, families with small children. The two-year implementation of a new e-commerce platform also discouraged parents from becoming sales reps, but marketing chief Heather Cobb said that the new platform has been working well since it was implemented in January, and that she hopes the number of reps will start to increase.
White’s biggest priority at the moment, he said, is to sell EDC’s Oklahoma headquarters and use the proceeds to pay off its debt. Sale negotiations are continuing, and when a deal is reached, EDC expects to lease back part of the building to house its employees. No timetable was announced for when a sale may be completed.
