With sales of The Hunger Games trilogy down significantly, Scholastic reported that total revenue for the fiscal year ended May 31 fell 19.4%, to $1.79 billion and net income dropped to $31.1 million from $102.4 million in fiscal 2012. Revenue fell in four of Scholastic’s five operating groups, including the children’s book publishing and distribution arm where sales fell 24%, to $846.9 million. The largest decline came in the trade segment (home to Hunger Games) where revenue tumbled 54%, to $182.7 million. Book club sales also had a soft fiscal 2013 with sales down 22%, to $206.0 million. Sales of book fairs rose 1%, to $458.2 million.
The classroom and supplemental materials publishing group was the only segment to post an increase in revenue in the last fiscal year, with revenue up 5%, to $218.0 million. Scholastic said the increase was due to increased classroom book sales as well as strong revenues from classroom magazines and other nonfiction content aligned to Common Core State Standards. Sales in the educational and technology sector fell 11%, due to lower purchases of high margin curriculum educational technology products in the beginning of the year, partially offset by increased demand for the Scholastic’s professional development and consulting businesses associated with training for Common Core State Standards. International segment sales were off 10% primarily because of lower revenues in Canada and Australia as a result of lower The Hunger Games sales. Sales in media, licensing and advertising dropped 22%.
Company CEO and chairman Dick Robinson said in prepared remarks that he expects results to improve in fiscal 2014, although the forecast is for revenue to grow to about $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 (from $1.37 in fiscal 2013).
Revenue and profit growth will be driven primarily by the company's education businesses as a result of the introduction of new educational technology products. Scholastic said that in its children's book businesses, “we are aligning resources to serve customers in a unified way and introducing grade-specific marketing in School Book Clubs.” Children's book revenue is expected to decrease slightly in the year as lower year over year sales of The Hunger Games trilogy are expected to be partially offset by increased revenue per fair in book fairs and the release of new trade titles. Book club revenue is expected to be flat.
In its release, Scholastic said it is “continuing to implement programs to enhance operating efficiency and to align its cost base with its revenue growth expectations.” In fiscal 2013, Scholastic reported a $9.6 million pretax severance charge related to its cost savings program, and in the fourth quarter it said it sold one of its facilitites, closed its Click Club business as well as a subscription-based business in its media,licensing, advertising segment.
