Scholastic is the world’s largest publisher and distributor of children's books and was established in 1920. The company publishes and distributes children’s books, educational technology products and children’s media under five divisions: Children’s Book Publishing and Distribution; Classroom and Supplemental Materials Publishing; Educational Technology and Services; Media, Licensing and Advertising; and International. Children’s Book Publishing and Distribution account for publishing and distribution in the United States through school-based book clubs and fairs, e-commerce, and trade. Scholastic and its subsidiaries compete in more than 150 counties.
Classroom and Supplemental Materials Publishing was introduced after fiscal 2011, a renaming of the Educational Technology and Services division. Scholastic split the results retroactively.
Analysis & Key Developments
Financial
Scholastic announced total revenues for fiscal 2014 of 1.82 billion USD, a 1.7% increase from 1.79 billion USD in 2013 due to strong fourth quarter sales with revenues up 8%. Book club revenue and education technology sales also contributed with 12% and 9% increases, respectively. The Children’s book clubs and fairs generated 25 million USD, driven by new marketing strategies.
The increase was partly offset by lower revenues from Children’s after the Hunger Games trilogy, along with declines in International and Media, Licensing and Advertising.
Educational Technology and Services revenues increased to 249 million USD from 228 million USD in 2013, due to new products.
Classroom and Supplemental Materials Publishing revenues increased due to higher classroom magazine circulation, up to 230 million USD from 218 million USD.
The International segment recorded a drop in revenues from 441 million USD in 2013 to 414 million USD in 2014, due to the adverse impact of foreign exchange rates of 24 million USD and low margin software business in Australia. UK sales were muted due to a decline in the sales of Hunger Games titles. The Media, Licensing and Advertising division closed fiscal 2014 with a 3 million USD decrease to 56 million USD, due to lower sales of the Hunger Games audio books, Leapster products, and decreased advertising revenues.
Internal organization
Scholastic announced the divestment of its Educational Technology and Services business to Houghton Mifflin Harcourt for 575 million USD in cash in April 2015. CEO Richard Robinson explained the sale was made to focus on core businesses: “The EdTech business has a substantially different model for product development, marketing and sales from Scholastic's core school-based and consumer print and digital publishing businesses.” The EdTech unit recorded sales of 249 million USD during the fiscal year ended May 31, 2014.
International
Scholastic has operations in the United States, Canada, the United Kingdom, Australia, New Zealand, Ireland, India, China, Singapore and other parts of Asia, and sells products in more than 150 countries.
Bestsellers
Several Children’s front list titles from 2014 offset trade declines, including Star Wars: Jedi Academy by Jeffrey Brown, Spirit Animals™ #1: Wild Born by Brandon Mull and Spirit Animals™ #2 : Hunted by Maggie Stiefvater, The Finisher by David Baldacci, Tui Sutherland’s Wings of Fire #4: The Dark Secrets and Minecraft: Essential Handbook and Mincraft: Redstone Handbook.
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