PW: Scholastic Posts Gains in Sales and Profits in Fiscal '98

Jim Milliot |

Jul 20, 1998

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Scholastic Posts Gains in Sales and Profits in Fiscal '98
Jim Milliot -- 7/20/98
Led by an increase of nearly 13% in its domestic book publishing operations, Scholastic reported a total sales gain of 9.5%, to $1.06 billion, in its fiscal year ended May 31, 1998. The sales increase, coupled with more than $25 million in cost savings, resulted in the company posting operating profit of $48.1 million, compared to $17.7 million in fiscal 1997, while net income rose from $600,000 to $23.6 million.
In a meeting with analysts last week, Scholastic chairman Dick Robinson said the company had delivered on its promise that it would turn around after a disappointing fiscal 1997. In addition to cost-cutting, Robinson noted that sales in both its book clubs and book fairs rose 15% in the year, and that trade sales, excluding Goosebumps, rose 20%. The company also benefited from approximately $70 million in sales from the Scholastic Literacy Place Reading Program.

Also at the meeting, Robinson said that Scholastic had "redefined itself as a global children's publishing and media company in education and entertainment." As part of that mission, Scholastic reorganized its educational publishing efforts into two groups -- the Education Group, co-headed by Ruth Otte and Linda Koons, which combines Scholastic's school group and new media unit, and Scholastic Learning Ventures headed by Margery Mayer. The new Education Group integrates the company's traditional print offerings with its new media products. According to Robinson, the Education Group will allow for the creation of a wider range of properties. Robinson noted that in today's school market, teachers are looking to buy an integrated multimedia package and do not want to have to buy print and electronic products separately. The new Learning Ventures Unit will be responsible for new business development and will also house the Electronic Bookshelf that the company bought in April.

Robinson said Scholastic's goal is to achieve revenue growth rates of about 10% in both fiscal 1999 and 2000, and that he expects to reach an operating margin of 9% by 2000. The company had an operating margin of 4.5% in fiscal 1998.

Analysts apparently liked what they heard from Scholastic, as its stock rose by $5.12 following the meeting, to close at $43.50.
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A version of this article appeared in the 07/20/1998 issue of Publishers Weekly under the headline: