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Revenue at Scholastic Corporation plunged 46% to $285m in the three months to 31st August, a decline from $531.3m in the same period last year, when the company published the seventh book in the Harry Potter series.
Revenue in the children's book division dropped by 79% to $61m, from $296.8m the previous year, reflecting Harry Potter trade revenue of approximately $240m in the 2007 quarter. Overall net loss from continuing operations in the quarter was $44.7m, compared to a net gain of $3.3m.
Chairman Dick Robinson said the company's focus continues to be on cutting costs, an initiative that includes a hiring freeze and a voluntary retirement program for employees over age 50. He said that the company was on track to reduce headcount and achieve $25m to $35m in annualised cost savings, having implemented a voluntary retirement programme, frozen hiring and reduced costs for paper, printing, postage and in other areas in the first quarter.
"We also laid the groundwork for profitable growth in the Children’s Book businesses this fiscal year with successful launches of The 39 Clues and The Hunger Games, this fall’s staged roll-out of a new on-line selling platform in Clubs, and new strategic pricing across channels. We completed the divestiture of the US direct-to-home continuities business as well.”
The group's international division posted revenue of $88.1m for the quarter, compared to $90.3m in 2007, with foreign exchange benefiting revenue by $2.9m. The year on year differences primarily reflected lower Harry Potter export revenue, said the company. The first quarter is also typically the smallest for the international division, with schools out of session in the United Kingdom and Canada, resulting in a seasonal loss.
Scholastic said it continued to expect "solid profit and margin growth (excluding Harry Potter) in fiscal 2009, with revenue of $2bn to $2.1bn".