Despite higher sales and earnings, second quarter results for the period ended November 30 were below expectations at Scholastic and the publisher lowered its guidance for the full year. Scholastic chairman Dick Robinson attributed the shortfall to lower spending by school districts and lower than expected sales in its book club segment. Higher digital investments also impacted earnings.
There were a number of bright spots in the period, however, with sales in Scholastic’s Children’s Book Publishing & Distribution group increasing 5%, to $387.3 million. Book club sales rose only 0.5%, to $138.9 million as an increase in the number of orders was offset by a decline in revenue per order. Sales in the trade group rose 8%, to $53.4 million, driving by sales of the Hunger Games trilogy, 39 Clues and Harry Potter titles. Book fair revenues also rose 8%, to $195.0 million, led by a modest increase in the number of fairs and higher revenue per fair. For the first six months of the year, revenue for the entire children’s group increased 3%, to $460.2 million.
In its other segments, sales in Educational Publishing fell 17%, to $101.6 million. A decline in stimulus money that helped boost technology sales was one factor in the decline as was uncertainty about state and local budgets that caused schools to delay or decrease purchases. In the International segment sales rose 11%, to $145.9 million, with sales up in Australia, Canada and Asia and export revenue rose as well. Media/Licensing/Advertising group sales increased8%, to $40.9 million led by higher advertising sales.
For the first six months of fiscal 2011, sales were down slightly, dropping to $966.6 million from $975.7 million, although net earnings rose to $39.7 million from $32.5 million. For the full year, Scholastic expects revenue to be between $1.9 and $1.95 billion with earnings per share at $1.80 to $2.05.
