NEW YORK – Scholastic (NASDAQ:) Corporation (NASDAQ: SCHL), the well-known publisher of children’s books, reported a disappointing fourth quarter, missing analyst expectations for both earnings per share (EPS) and revenue.
The company posted an adjusted EPS of $1.73, significantly below the analyst estimate of $2.66. Revenue also fell short, coming in at $474.9 million against the consensus estimate of $552.5 million.
The company’s stock price fell by 8% in response to the earnings release.
Scholastic cited a slowdown in supplemental curriculum purchases by schools and increased pressure on consumer spending as key factors impacting its sales in the Education Solutions and School Book Fairs businesses.
Despite the challenges in the fourth quarter, Scholastic’s President and CEO, Peter Warwick, highlighted the company’s strategic advancements, including the acquisition of 9 Story Media Group, which is expected to enhance Scholastic’s content creation strategy. Warwick stated, “After only a month, the combined business is already executing on an expanded development and production slate.”
Looking ahead, Scholastic expects modest revenue growth for fiscal 2025, projecting an increase of 4% to 6%. The company is targeting an adjusted EBITDA of $140 to $150 million, considering the contribution of 9 Story Media Group and ongoing investments in growth initiatives, despite the anticipated continued pressure on consumer and school spending. For the fiscal first quarter of 2025, Scholastic anticipates a seasonal loss in line with the previous year.
In comparison to the same quarter last year, the company’s revenues decreased by 10%, with the fourth quarter revenue dropping from $528.3 million in fiscal 2023 to $474.9 million in fiscal 2024. Operating income also saw a significant decline, falling 49% from $92.0 million to $47.2 million.
Scholastic’s full-year results reflected similar trends, with revenues for fiscal 2024 decreasing 7% to $1,589.7 million from $1,704.0 million in the previous year. Operating income plummeted by 86%, from $106.3 million to $14.5 million.
The company remains committed to its long-term growth strategy and to returning value to shareholders, having returned over $181 million through dividends and share repurchases in fiscal 2024. Warwick expressed confidence in Scholastic’s multi-year opportunities, stating, “We expect to begin seeing the benefit of our strategic investments, especially in children’s IP, as we pursue accelerated growth and margin targets for the next three to five years with continued investment in our key growth initiatives.”
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