A strong rebound in book fair revenue and good sales in its education business led to a 29% increase in sales and a 71% jump in operating profit at Scholastic in the quarter ended November 30, 2021, over the comparable period in fiscal 2021. Sales were $524.2 million, up from $406.2 million, and operating profit increased to $83.4 million from $48.8 million.
The big revenue driver was the company’s book fair operation, which had seen sales plummet last year because of school lockdowns. Fair revenue in the quarter was $176.2 million, up from $47.7 million a year ago. Scholastic president and CEO Peter Warwick attributed the improvement to the number of fairs increasing to 70% of fairs held in the second quarter of fiscal 2020, before the pandemic, as well as to better-than-expect sales per fair.
The jump in book fair sales more than offset a 4% decline in trade sales and a 23% drop in book club revenue. Scholastic said that, while club revenue per event was higher than expected, labor shortages and systems issues in its fulfillment operations “delayed the shipment of a significant amount of orders” into the current quarter.
The dip in trade sales was attributed to difficult comparisons to last year, when The Ickabog and new Harry Potter illustrated editions sold very well. In the most recent quarter, Cat Kid Comic Club: Perspectives and The Christmas Pig were top sellers.
Sales in the education group rose 18% in the quarter, to $79.5 million. Scholastic said it has had good demand for its new Rising Voices Library program and also had higher sales in its professional learning services unit. Workbook sales fell after strong gains last year.
Sales in the international group fell 3% in the quarter. Lockdowns in Australia and New Zealand led to a decline in revenue in those countries offsetting higher sales in Canada. Sales in the U.K. were flat, Scholastic reported.
Scholastic had a generally positive outlook for the second half of fiscal 2022, though it had a number of caveats, including the uncertainty caused by the future of the Covid-19 virus. The company also pointed to ongoing challenges that all of publishing is facing that threaten to increase costs. During the remainder of the year, Scholastic said, its results “will reflect the increasing impact of rising cost pressures in paper, printing, and freight as current period inventory, with an associated higher cost of product, is sold. Similarly, the company expects higher labor costs due to continuing inflationary pressures and on-going labor shortages, especially in its warehouse and distribution operations."
Scholastic said it is taking what actions it can to mitigate the higher costs, and pointed to “process improvements and automation, proactive resource allocation, diversifying our vendor base, pricing and product rationalization.”
