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Scholastic Corporation Reports Fiscal 2025 Third Quarter Results

On March 20, 2025, Scholastic Corporation (NASDAQ: SCHL), a leading global children's publishing, education, and media company, shared its financial results for the third quarter of fiscal 2025, covering the period that ended on February 28, 2025. The company highlighted a solid performance amidst challenging market conditions, demonstrating resilience and strategic foresight.

Financial Highlights

During the third quarter, Scholastic achieved revenues of $335.4 million, marking a 4% increase compared to the preceding fiscal year. Notably, the company returned over $35 million to shareholders during this same period. The increase in revenue was partially fueled by contributions from the new 9 Story Media Group, alongside improvements in School Book Fairs and Clubs revenue, which have proven essential for the company’s business strategy.

Peter Warwick, President and CEO of Scholastic, reported that the company experienced modest growth in revenue despite facing pressures on family and school spending for books and educational materials. He stated, “Scholastic's unique strengths in engaging children with quality literature and media stand out, especially amid recent market dynamics.”

Best Selling Titles

Among the standout events was the continued success of Dog Man Big Jim Begins, the latest installment in Dav Pilkey’s beloved series, which has been the top-selling book in the U.S. and other major English-speaking countries since its release in early December. Additionally, Scholastic debuted Sunrise on the Reaping, the fifth book in Suzanne Collins' acclaimed Hunger Games series, which has garnered strong pre-orders and is predicted to perform well in the upcoming fourth quarter.

Segment Performance

Children's Book Publishing and Distribution

In the Children’s Book Publishing and Distribution segment, revenues rose by 5% to reach $203.3 million. Book Fairs achieved $110.7 million, reflecting an 8% increase from the previous year, aided by a larger number of fall fairs taking place in December. Also noteworthy was the 14% revenue growth from Book Clubs, attributed to higher order volumes.

Despite the growth in these areas, the overall performance was tempered by a decline in the retail book market, influenced by heightened consumer spending pressures.

Education Solutions

Conversely, the Education Solutions segment faced challenges with a 16% decrease in revenues, totaling $57.2 million. This decline was linked to the ongoing slowdown in the supplemental curriculum market. The segment reported an operating loss of $6.9 million, compared to a smaller loss of $0.8 million in the same quarter last year. Scholastic remains optimistic about future product launches that may revitalize this important segment.

Entertainment and International Operations

Scholastic's Entertainment segment reported revenues of $12.8 million, primarily bolstered by the inclusion of 9 Story Media Group's results. An operating loss was recorded at $3.9 million, which included one-time charges. Meanwhile, International revenues improved by 5% to $59.3 million, even when accounting for the negative impact of foreign currency exchanges.

Looking Ahead

As the company anticipates the fourth quarter, Scholastic has adjusted its outlook, forecasting a full-year Adjusted EBITDA of around $140 million versus the prior guidance of $140 to $150 million. The company is planning for modest revenue growth year-over-year, with a focus on prudent fiscal measures to navigate the economic landscape.

Warwick emphasized the company's ongoing commitment to capital allocation priorities, which includes expanding share repurchase authorization to $100 million and returning cash to shareholders amidst these turbulent times. He concluded by affirming Scholastic’s strategy to ensure long-term growth and profitability while adapting to the dynamic market conditions.

Conclusion

In conclusion, Scholastic Corporation's third-quarter results indicate a steady performance amidst challenges and provide a clear roadmap for the company's future. By fostering popular franchises, optimizing capital allocation, and addressing market pressures, Scholastic is positioned to continue its legacy as a leader in children's literature and education.