In the third quarter ended February 28, revenue at Scholastic fell 2%, to $329.1 million, and the operating loss increased 13%, to $26.9 million.
Trade revenue fell 10%, to $69.7 million, primarily because the same period a year earlier featured "a major Dog Man release." Children's book publishing and distribution revenues fell 3%, to $197.6 million, while book fair revenues gained 2%, to $113.3 million. Book club revenues slipped 4%, to $14.6 million.
Education revenues fell 2%, to $56.1 million, reflecting a "continued challenging funding environment for schools and school districts, which has impacted spending on supplemental curriculum materials."
Entertainment revenues rose 25%, to $16 million, and international revenue fell 7%, to $58.7 million, also reflecting strong Dog Man sales a year earlier.
Still, the company reported "higher profits in children's book publishing and distribution and operating performance in the education segment reflecting continued cost discipline."
Scholastic president and CEO Peter Warwick emphasized that the company has made "significant progress in its ongoing plan to enhance shareholder value, including optimizing our balance sheet with over $400 million in net proceeds from two sale-leaseback transactions and advancing our strategy to drive long-term growth and margin expansion. After returning over $147 million to shareholders through open-market share repurchases since December, our board has additionally authorized a $200 million 'modified Dutch auction tender offer' anticipated to be launched in the coming days. This is a core part of a new $300 million share repurchase authorization that underscores our confidence in Scholastic's long-term opportunity."
He noted, too, that the children's publishing, entertainment, and distribution businesses "continued to prove their strength, led by solid performance in book fairs, and underpinned by our iconic franchises across formats and platforms, our proprietary school-based channels and an integrated media business, which is rapidly expanding our reach and access to kids and families on screens and digitally."
Scholastic is making "meaningful progress" in transforming the education division, he continued, with year-to-year trends moderating "despite continued funding volatility for schools and districts."
Scholastic said it forecasts full-year revenue to be "approximately flat" compared to the previous year, "reflecting year-to-date softness in education and strong comps in trade a year ago."