Shares of Scholastic Inc. (SCHL, +3.62%) dropped more than 10% in the extended session Thursday after the publisher’s revenue dropped in the crucial back-to-school quarter. This decline was mainly due to Scholastic’s book-club business dwindling. As a result, the company has adjusted its earnings expectations for fiscal 2024, predicting lower earnings.
Challenging Environment in U.S. Schools
According to Chief Executive Peter Warwick, Scholastic is currently facing “a complex environment in U.S. schools.” This statement sheds light on the difficulties the company is experiencing in today’s educational landscape.
Financial Performance
In the fiscal second quarter, Scholastic earned a total of $76.9 million, which equates to $2.45 per share. This is a slight increase compared to the same period last year when the company earned $75.3 million, or $2.12 per share.
However, revenue fell by 4%, amounting to $562.6 million this quarter. Scholastic attributes this decrease to reduced promotional spending and the elimination of unprofitable orders in book clubs.
Revised Expectations for Earnings
Scholastic now expects adjusted EBITDA to be between $165 million and $175 million. This is a significant adjustment from its previous range of $190 million to $200 million.
Moreover, the company anticipates that full-year revenue will remain relatively the same as the previous year or slightly lower. Initial expectations were set at a growth rate of 3% to 5%.
