An increase of 6% in its ongoing operations plus a $100-million contribution from Grolier resulted in total revenues at Scholastic increasing 37.4%, to $433 million, for the third quarter ended February 28, 2001. Higher revenues and more cost savings pushed net income up 85%, to $3.7 million, in the quarter. Company chairman Dick Robinson said he was very pleased to report that in a "challenging market" Scholastic's results came in ahead of expectations.
Scholastic's children's book publishing and distribution group sales jumped 35.5%, to $266.4 million. In addition to $57.9 million generated by Grolier's direct-to-home business, book fair sales rose 22% and trade sales were up 10%. Harry Potter backlist titles had about $13 million in sales in the period, while Scholastic shipped $12 million worth of J.K. Rowling's Potter companion titles, Fantastic Beasts & Where to Find Them and Quidditch Through the Ages. Proceeds from the sale of the books are going to U.K. Comic Relief. The publishing group has also benefited from the success of the PBS Kids television show Clifford the Big Red Dog, which is helping Scholastic double book sales of its Clifford line this year. Book club sales were up in single digits in the quarter, and Scholastic executive v-p Barbara Marcus said she expects that book club sales will be up by mid-single digits for all of fiscal 2001.
The success of Clifford helped lift revenues 35.1% in the media, licensing and advertising group to $35.4 million. PBS has recently placed an order for 25 new episodes, giving Scholastic a total of 65 Clifford programs. Improved results from Clifford offset a $3-million loss from the company's Internet operations.
Revenues in the international group rose 38.5%, to $71.6 million, an increase that reflected $22.4 million in sales from Grolier. Scholastic's educational publishing group had a 46.4% sales increase, to $59.6 million, due to the addition of $17 million from Grolier's print and online library sales and a 5% increase in Scholastic's educational publishing operations.
Robinson told analysts during a conference call that he feels "pretty good about our ability to generate revenues in an economic downturn." The company is looking for profits to increase in the low double-digits in fiscal 2002, due mainly to cost controls. Revenues are projected to be flat to slightly up in the next fiscal year, as Scholastic looks for ways to replace approximately $200 million in revenues from the Potter titles. One area for which Scholastic plans an aggressive push in the next fiscal year is the preschool market. Scholastic intends to significantly increase its distribution efforts to mass merchandisers and will feature coloring and activity books from the recently acquired Barney book rights as well as Clifford titles and other Scholastic properties.
For the nine-month period, net income rose 151%, to $49.4 million, on a 45.1% revenue gain, to $1.46 billion.
