Net income rose 10.5%, to $82.8 million, in the second quarter ended November 30 at Scholastic on a 3% sales increase, to $685.3 million. The gain was driven by more than a 30% increase in Scholastic’s educational technology and service segment, and a 12% increase in the classroom and supplemental materials publishing group. Sales in children’s book publishing and distribution group rose by less than 1%, to $388.6 million.
In the children’s book publishing and distribution group, trade sales rose 29%, to $68.6 million, led by multiple bestsellers, including Suzanne Collins’ The Hunger Games trilogy, which continues to perform very well in both print and e-book formats, and Brian Selznick’s Wonderstruck and The Invention of Hugo Cabret. School book fairs revenue was even with the second quarter of fiscal 2011, reflecting flat fair count and revenue per fair. In School book clubs, sales fell 10%, but profits improved substantially compared to a year ago, as a result of reduced spending, including promotion costs. Overall segment operating income improved 12%, to $108.6 million, due to strong trade sales and improved clubs operating results, partially offset by higher spending on e-commerce and e-books initiatives.
In educational technology and services, the 30% increase, to $65.4 million, was due to “robust” sales of educational technology, including READ 180 Next Generation and System 44, Scholastic said. Higher sales of book collections to schools and non-profit literacy groups, as well as of classroom magazines led to the 12% increase in sales in the classroom and supplemental materials publishing segment
In the international market, revenue slipped to $144.1 million from $145.9 million in the prior year period, primarily reflecting lower sales in Australia. Foreign exchange had a positive impact on revenue of $3.3 million in the quarter compared to last year. Scholastic’s U.K. operation had improved results and sales in southeast Asia continued to be strong as Scholastic expanded its publishing and product development in the region to accelerate long-term growth. In the media, licensing and advertising segment revenue in the quarter fell to $28.5 million from $33.1 million as a result of a planned decrease in custom marketing programs for third-party sponsors, partially offset by higher production revenue.
Scholastic chairman Dick Robinson said at the mid-way point of the fiscal year Scholastic “remained on track to achieve fiscal 2012 goals for higher profits, significant growth in educational technology and further progress with the digital transition of our children’s book business.” Scholastic affirmed its fiscal 2012 outlook for total revenue of approximately $1.9 billion and earnings per diluted share from continuing operations in the range of $1.75 to $2.10, before the impact of one-time items associated with cost reduction programs and non-cash, non-operating items.
For the first six months of the year total revenue was up 5%, to $1.0 billion, and earnings rose 40% to $55.7 million.
