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May 31, 2020
Scholastic Q4 2020 Earnings Report
Scholastic's Q4 results were significantly impacted by COVID-19, with school distribution channels experiencing closures, though trade publishing saw a 45% increase due to a strong frontlist.
Key Takeaways
Scholastic Corporation reported a challenging fourth quarter due to widespread school closures impacting book clubs and fairs, which led to a significant revenue decline. This was partially offset by strong trade sales. The company is implementing cost-saving measures and adapting its services to address the evolving educational landscape.
Revenues decreased by $186.7 million, or 40%, compared to the prior year period as a result of school closures.
Operating income decreased by $78.2 million, leading to an operating loss of $46.2 million.
Trade sales increased by 45%, driven by a strong frontlist.
The company is implementing a $100 million cost savings program for fiscal year 2021.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Scholastic anticipates a slower start to the 2020-2021 school year and expects revenues in FY2021 to be slightly below FY2020 sales, offset by the Company's $100 million cost reduction plan.
Positive Outlook
- Expects strong demand for children's books delivered through book clubs and book fairs to schools and direct-to-home.
- Expects to have strong sales for digital education programs, including classroom magazines.
- Trade business is expected to remain strong with scheduled releases.
- New titles from best-selling authors will appear throughout the year.
- Significant progress has already been made in its cost savings program, with a target of reducing expenses by $100 million in fiscal 2021.
Challenges Ahead
- Planning for a slower than normal start to the 2020-21 school year.
- Expectations for most schools to be open, but with a variety of in person, distance learning and hybrid options.
- Company expects revenues in FY2021 to be slightly below FY2020 sales.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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