Scholastic today devoted lots of effort to convince analysts that the decline in sales and operating income in the second quarter ended November 30 was just a blip rather than the beginning of a trend. In both its second quarter announcement and the subsequent conference call, Scholastic executives noted that the company had earlier warned that second quarter results would fall from last year’s comparable period, due mainly to the timing of new frontlist titles. And that is what happened.
Total revenue fell 3%, to $544.6 million, and operating income dropped from $101.3 million to $74.7 million in the most recent period. Sales at the trade group dropped 13%, to $102.8 million, which the company attributed to lower frontlist sales due to its release schedule. The company noted that the new title in Dav Pilkey’s Dog Man series, Big Jim Begins, came out after the quarter was over and has sold about 404,000 copies at outlets that report to Circana BookScan. The company is also expecting big things from the March 2025 release of Sunrise on the Reaping, the fifth book in Suzanne Collins’s Hunger Game Series.
In addition to trade publishing, the two other businesses that constitute Scholastic’s children’s book publishing and distribution group—book fairs and book clubs—had mixed results. Fair revenue fell 5%, to $231 million, which Scholastic said was due to moving more events into December because of the late Thanksgiving and hurricanes. The company still expects the number of fairs it will hold this fiscal year to top 90,000, the most since before the pandemic. Book club sales rose 2%, to $33.2 million, and Scholastic noted that after downsizing the operation to create a more profitable business, it was now looking to “reengage” customers.
Revenue in the education solutions division fell 12%, to $71.2 million, which Scholastic said was “related to lower spending on supplemental curriculum products, as school districts adopt and implement new core programs.”
International sales fell 2%, to $86.7 million, due mainly to a soft retail market in Australia. The international group has gone through a reorganization “to improve coordination and decision-making” across its various markets, Scholastic CEO Peter Warwick told analysts.
Given these various factors, including the uncertainty about what the Trump administration may do about tariffs and educational policies, Scholastic reiterated that it still expects full fiscal 2025 sales to increase by 4% to 6% over last year and adjusted EBITDA to come in at $140 to $150 million. For the first six months of the year, sales were down 1%, to $781.8 million, and the company had an operating loss of $13.8 million compared to operating income of $2.2 million in the first half of fiscal 2024.
