Scholastic is the world’s largest publisher and distributor of children’s books and is the leading operator of school-based book clubs and book fairs in the United States. The company was founded in 1920 as a classroom magazine. Scholastic distributes its products and services through these proprietary channels, as well as directly to schools and libraries, through retail stores and online, and is divided into three segments: Children’s Book Publishing and Distribution; Education (formerly titled Classroom and Supplemental Materials Publishing); and International. The restructuring is a result of the sale of its educational technology and services business (formerly the Educational Technology and Services segment) and the restructuring of the businesses formerly included in the Media, Licensing and Advertising segment.

Analysis & Key Developments

Results for fiscal year 2016 were released in time for this ranking and they are included in the report, though most other companies are listed with their 2015 results.

In 2016, Scholastic reported full year revenue of 1.67 billion USD, up 2% from 1.64 billion USD in 2015, accounting for the negative impact of foreign exchange of 43 million USD. Trade publishing revenues were up 14% on the strength of its core front list and the Harry Potter series, while revenues in the Education segment grew 8% for the second year in a row, driven by classroom books and magazines.

Financial

Scholastic announced that total revenues for fiscal 2015 increased by 4.8% to 1.64 billion USD, compared to 1.56 billion USD in the prior fiscal year, reflecting higher sponsor growth and order volume in school-based book clubs, continued growth in school book fairs, increased circulation in classroom magazines, and strong demand for the company’s guided reading programs. The growth was partially offset by unfavorable foreign currency translation attributable to the strength of the US dollar overseas.

The book clubs and book fairs channels of the Children’s Book Publishing and Distribution segment experienced higher revenues in 2015. Revenues totaled 959 million USD, 58.6% of the total, against 893 million USD in 2014, driven by changes in the marketing strategies for the stated channels.

Revenues from the Education segment (previously Classroom and Supplemental Materials Publishing) increased to 274 million USD in 2015, compared to 255 million USD in the prior fiscal year. The 8% revenue growth was driven by increased circulation in classroom magazines and strong demand for the company's guided reading programs. The division generated 16.9% of fiscal 2015 revenues.

International revenues declined during 2015 in US dollars but grew in most local currencies, and represented 24.5% of fiscal 2015 revenues. While the business in the major markets of Canada, Australia/NZ, and the UK was flat or slightly down, revenue from Asia continued to grow with the expansion of education and consumer businesses throughout Southeast Asia. Revenues for the International division totaled in 401 million USD in 2015, compared to 413 million USD in 2014.

Internal Organization

Divestment

Scholastic closed on the sale of Educational Technology and Services (EdTech) business to Houghton Mifflin Harcourt (HMH) for 575 million USD pretax in May 2015. The event was recorded as a discontinued operation in the company’s FY2015 results, with the effect that Scholastic for 2015 and going forward is comprised of Children’s Book Publishing and Distribution, Education, and International.

International

Scholastic has offices in the United States, Canada, the United Kingdom, Australia, New Zealand, Ireland, India, China, Singapore and other parts of Asia, and distributes its products in more than 150 countries.

Bestsellers

Bestsellers in the trade division during fiscal 2015 included the Harry Potter series, the Minecraft handbooks, the Hunger Games trilogy, and multiple series including I Survived, Spirit Animals, Wings of Fire, Amulet, Whatever After and Captain Underpants, as well as other titles such as Raina Telgemeier's titles Sisters, Drama and Smile.

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