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Scholastic sales dip, cuts spending

01.01.70 | Catherine Neilan

Global children's publisher Scholastic has reported a 1% decline in revenue from continuing operations for the quarter to 30th November, dropping from $687.6m to $661.6m. The business also announced that it had reduced its spending plan for the second half of fiscal 2009 by a further $20m by eliminating management bonuses and reducing all categories of discretionary spending.

Earnings from continuing operations in the second quarter were $58.4m compared to $82.3m a year ago. Operating income also dropped to $107.8m in the second quarter, from $138.9m in the prior year period. This company said this reduction was "largely attributable to severance and one-time expenses" as part of its "cost reduction plans". An "unfavourable foreign exchange impact of $6.7m" was also cited, as was higher royalty reserves.

The accounts show that the recent currency fluctuations cost its international business $21.5m in revenue, with sales in the quarter of $124.4m, compared to $144.8m. Excluding the negative foreign exchange impact, revenue slightly increased year-over-year. This largely reflected strong export sales and increased revenue in Asia, Australia and Canada, offset by lower revenue in the UK, which a year ago benefited from the release of "The Golden Compass" movie. Operating income was $14m down from $25.1m, primarily due to a $6.7m  adverse impact of foreign exchange as well as higher bad debt reserves in UK trade publishing. 

Richard Robinson, chairman, president and chief executive, was upbeat. He said: "Scholastic's customers responded to strong products, marketing and customer service, sustaining second quarter children's books and educational technology sales at approximately last year's levels. Looking forward, our healthy balance sheet and progress reducing costs will enable us to leverage this broader, more engaged customer base for profitable growth in the long term." 

• Catherine Neilan
• children's books
• Credit crunch
• Scholastic