Growing consumer caution and uncertainty surrounding federal government support for education led to a disappointing third quarter for Scholastic. The quarter ended February 28, 2025, saw total revenue rise 4%, to $335.4 million, at the company, with operating losses cut to $23.9 million, from $34.9 million a year ago. Still, results were below expectations, forcing executives to lower the forecast for the fiscal year that ends this May.

Scholastic now expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to be about $140 million, compared to earlier forecasts of between $140 million to $150 million. Last year's EBITDA was $136.9 million. The company now expects “modest” revenue growth compared to previous predictions of sales growth between 4% and 6% for the full year.

A particular sore spot for the company was its supplementary publishing business, which is housed in its Educational Solutions division, where sales fell 16%, to $57.2 million. Company executives attributed the decline to schools and school districts delaying purchases of books until they have more clarity on how much federal funding, if any, they can expect; those funds account for about 10% of school budgets nationwide.

The Educational Solutions segment has had a mixed financial history in recent years, and executives said that Scholastic is “reviewing its strategic options” for that part of its business. While that phrase is often used to suggest that a business might be up for sale, in a conference call, executives asserted that the focus is on an internal examination of the division, adding that Scholastic began as a publisher of supplementary materials.

In Scholastic’s largest segment, its children’s book publishing and distribution group, sales rose 5%, to $203.3 million. Book fair revenue increased 8%, to $110.7 million, and book club sales rose 14%, to $15.2 million. Sales of trade books inched up 0.3%, to $77.4 million, as higher frontlist sales were offset by soft backlist sales. In their comments, executives said that consumers appear to be slowing purchases of such discretionary items as children’s books considering the volatile state of the American economy, and that they expect that trend to continue into the current quarter.

The tempered forecast comes despite Scholastic’s release of the fifth book in Suzanne Collins' worldwide bestselling Hunger Games series, Sunrise on the Reaping, earlier this week. Scholastic CEO Peter Warwick said that print preorders for the book were up more than 65% compared to those for the fourth Hunger Games book, which was released in 2020.

Warwick and CFO Haji Glover spent a fair amount of time on the conference call discussing discussing overall economic conditions with analysts. Warwick reiterated comments he had made after Scholastic’s second quarter results were released, noting that, since the company has already paid for its inventory needs for the remainder of fiscal 2025 and the first half of fiscal 2026, it expects higher tariffs to have a minimal impact on costs for that time period.

Glover, however, acknowledged that Scholastic is unlikely to escape the impact of tariffs indefinitely. While children’s books are generally excluded from the current tariff increases, the novelty items Scholastic sells are subject to tariff increases. Perhaps of greater importance to the company, however, is that the paper Scholastic sources from Canada is also a subject of the tariffs.

Based on the information at hand, Glover said that Scholastic suspects that tariffs could increase production costs for its products “in the mid-single-digit millions range” in fiscal year 2026. To mitigate those expected increases, Glover said, Scholastic has reduced discretionary spending, frozen hiring in certain areas, and implemented a reorganization of its global operations, in addition to taking further, unspecified cost-saving actions in the current quarter.

This story has been updated.