EARNINGS DROP: Scholastic Corp. faces job cuts and rising costs
Province: 2008 July 25
NEW YORK — Scholastic Corp., the U.S. publisher of the Harry Potter novels, reported fourth-quarter earnings that missed analysts’ estimates and said it would cut jobs.
The shares fell the most in almost four months.
Profit dropped to $28.9 million US, or 75 cents a share, from $45.3 million, or $1.04, a year earlier, New York-based Scholastic said today in a statement.
Analysts on average had projected profit of 81 cents a share, based on three estimates compiled by Bloomberg. Sales in the period ended May 31 dropped two per cent to $536.1 million.
Scholastic CEO Richard Robinson, facing a future without new Harry Potter books, shut the unprofitable school-based subscription business in May and expects to complete a sale this quarter of its direct-to-home subscriptions unit.
While job cuts in fiscal 2009 announced today will save as much as $35 million, fuel, printing and paper costs may rise as much as $20 million, Robinson said.
Scholastic fell $2.03, or 7.2 per cent, to $26 in Nasdaq Stock Market trading yesterday, the most since March 27. The shares have dropped 25 per cent this year.
Scholastic had a fourthquarter net loss, including writedowns for the businesses it exited or plans to sell, of $13.1 million, or 34 cents a share, compared with net income of $40.4 million, or 93 cents, a year earlier.
Revenue in the current fiscal year that began June 1 will increase as much as five per cent to $2.1 billion, the company said. It forecast earnings from continuing operations of $1.75 to $2.10 a share, short of the $2.18 average of four analysts’ estimates compiled by Bloomberg.
Scholastic, which published the last of the seven Harry Potter novels in J.K. Rowling’s bestselling series last year, said fourth-quarter sales from children’s book publishing were little changed at $263.6 million.
Operating profit at the unit, Scholastic’s largest, fell 18 per cent to $35.9 million.
The company said revenue from Harry Potter titles in the current fiscal year will be $10 million to $15 million, down from about $270 million in fiscal 2008, when it released Harry Potter and the Deathly Hallows.
The company initiated a quarterly dividend of 7.5 cents a share to be paid to on Sept. 15 to shareholders of record as of Aug. 4.
