NEW YORK (
shares are surging today after the education and publishing company reported a loss in the first quarter, but boosted investors confidence with its second quarter and fiscal year outlook.
For the quarter ended August 31, the company saw a loss of $35.2 million, or 98 cents per diluted share, compared with a loss of $23 million, or 63 cents per diluted share, in the same period a year ago. Earnings from continuing operations were 95 cents a share, worse than analyst estimates of 57 cents a share.
"Scholastic typically records a seasonal loss in its fiscal first quarter, when most schools are not in session and its School Book Clubs and Fairs generate minimal revenue," the quarterly report stated.
"We are accelerating investment in educational technology, ecommerce and ebooks, as we use the company's strong free cash flow and balance sheet to increase long-term shareholder returns," said chairman, president and CEO Richard Robinson.
Revenue declined 7.8% to $290.9 million from $315.6 million during the quarter. Its children's books publishing segment saw revenue drop 4.5% to $72.8 million from $76.2 million due to higher expenses on its digital initiatives spending. Education publishing saw a 20.2% drop in revenue to 118.6 million from 148.7 million a year earlier. This drop off was caused by the division's lack of high federal stimulus funding in California that Scholastic benefited from last quarter.
"In Scholastic education, where we benefited significantly from the initial disbursement of federal stimulus funds a year ago, first quarter revenue declined, but we continue to target full year revenue in line with last year's record-breaking levels," said Robinson. "Though the federal funding landscape has changed somewhat, we expect that federal Race to the Top and School Improvement Grants, in addition to higher service revenue from our expanded customer base, will help drive growth later this fiscal year."
Management said that the start of the school year has increased sales and has affirmed it outlook for total fiscal revenue of around $2 billion.
"While school book clubs and fairs are just ramping up for the new school year, early customer metrics, including fair bookings and book club sponsor numbers, are positive," said Mr. Robinson. "We also achieved important milestones for our digital growth initiatives, rolling out our new online platform to all Book Club teachers and parents, and moving forward with our plan to launch a children's ebook offering by fiscal year-end."
Management confirmed its guidance to for earnings per diluted share in the range of $1.95 to $2.20.
Scholastic shares are up around 5.4% today to around $26.90.
-- Written by Theresa McCabe in Boston.
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