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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.
Scholastic
Scholastic
Scholastic Revenue by Segment
Scholastic Revenue by Geographic Location
Revenue by Segment
Education Solutions Revenue
CapyFin.comRevenue by Geographic Location
International Revenue
CapyFin.com 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.
- The funding needs will be reassessed as new information on the COVID-19 impacted business and banking markets becomes available.
- Uncertainties related to the ongoing impact of COVID-19 may affect business operations and market conditions.