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Harry drives Scholastic's global sales

24.07.08 Alison Flood

Scholastic's global sales were up 15% to $2,205.6m in the year to end-May 2008, driven by strong Harry Potter trade sales of approximately $270m following its US publication of Harry Potter and the Deathly Hallows in July 2007. It also said that a strong performance in the UK, Australia and Asia contributed to the increase.

Turnover in the three months to 31st May 2008 was down 2% on the same period the previous year to $536.1m.

Children's book publishing and distribution's sales were up 24% to $1,164.7m over the year, with operating income increasing to $169m from $95.5m a year ago. Scholastic said this was driven by Harry Potter, as well as strong sales from Star Wars: A Pop-Up Guide to the Galaxy, How To Be The Best At Everything (The Boys’ Book), How To Be The Best At Everything (The Girls’ Book) and The Invention of Hugo Cabret by Brian Selznick.

Educational publishing's turnover was up to $414.1m from $412.8m a year ago, with operating profit declining to $64.6m from $76.3m a year ago reflecting "planned investments in the sales and service organization and in new product development".

Scholastic said that it made "important investments" over the period to achieve ongoing revenue and profit growth, and to help it achieve 9% to 10% operating margins in 2010. These included building a new online selling platform for its school book clubs to launch in the next year; developing new publishing properties such as multi-platform adventure series The 39 Clues; and accelerating investment in China and southeast Asia, where it said its business expanded by more than 20% in fiscal 2008.

Scholastic said that negotiations for the sale of its direct-to-home continuities business, which it is planning to exit, had moved forward and that it expected to finalise terms in the next three months. The publishing group also shut down its school-based continuities business from end-May 2008.

Richard Robinson, chairman, c.e.o. and president, said: "Historically, the children’s book market has fared well during economic slowdowns. This factor, combined with Scholastic’s competitive pricing and unique value proposition relative to competitors, gives us confidence that we can achieve modest revenue growth in the current climate."

Scholastic expects revenue in the year to end-May 2009 to reach $2bn to $2.1bn. It said that children's book publishing and distribution would "achieve modest revenue growth and increased profitability, excluding Harry Potter sales", with new properties such as The 39 Clues to contribute growth to trade sales. It expects sales growth of 3 to 5% in education technology.

Scholastic hopes to make cost and headcount reduction of $25m to $35m in cost savings over the next year, but it said this would be partially offset by higher paper, printing, shipping and fuel prices.

It said it expects to make capital expenditures of approximately $65m to $75m over the year, and to spend approximately $80m to $90m on prepublication and production, which it said reflected "the rescheduling of certain projects and continued investment in new education products and online properties".

Financial International harry potter children's Scholastic Alison Flood

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