By Porter Anderson, Editor-in-Chief | @Porter_Anderson
Peter Warwick: ‘Continuing Demand’Scholastic, the world’s dominant publisher of children’s books, educational, and media content, today (July 21) has announced that the company will “strategically increase book fair count, anticipating 85 percent of pre-pandemic levels, while maintaining strong revenue-per-fair.”
That’s one of the highlights of Scholastic‘s report on its 2022 Q4 results and for the full year ending May 31.
To be clear, the book fairs referred to here are Scholastic’s own branded school-based book fairs. We’ll embed an introductory video about them below. You can see some of the company’s information for educators about these fairs here. One of the key elements of the value of these fairs stressed by the company is “independent reading and book ownership” as a pivotal element of educational efficacy.
In its commentary, the company points out that the book-fair sector was initially the area most affected by the impact of the international health emergency.
While these book fairs are not the various events staged in many parts of the world as integral components of the trade’s business—and often crucial book-selling opportunities—Scholastic’s observations that in-person fair programs are returning strongly echo the international markets’ efforts this year to resume fully physical, in-person book fairs and trade shows for all sectors of the trade.
When Scholastic refers to “fair counts,” it’s referencing these self-produced fairs staged in partnership with schools. Scholastic says it recorded 72 percent of pre-pandemic in-person fair counts, and “drove record levels of revenue-per-fair” in the United States’ book-fair channel. International notes include a major-market revenue increase of US$4.5 million, “primarily driven by the performance of the book-fair channel in both the United Kingdom and Canadian markets,” the report’s discussion says.
Business in Australia and New Zealand was adversely affected, the report says, by the later timing of COVID-related shutdowns when compared to the other markets.
“Revenues in Asia,” Scholastic says, “decreased as the company exited its direct-sales business, which is no longer a strategic fit for the company’s future growth strategy, and China continued to be impacted by restrictive government regulations on after-school tutoring programs as well as pandemic-related shutdowns.” (See our report on China’s market growth in the first half of this year.)
Peter Warwick: ‘Future Sustainable Growth’
Overall, Scholastic reports that it delivered positive EBITDA in Q4 and year-over-year, “driven by the success of its strategic and operational initiatives and increased demand,” while exceeding expectations “for this rebuilding year, particularly for book fairs.”
The fourth quarter’s operating income was up US$55.8 million on 28-percent year-over-year higher revenue of US$514.4 million. It projects 2023 full-year revenue to increase 8 to 10 percent over the 2022 performance. The regular quarterly dividend was raised 33 percent to 20 cents per share.
In his commentary on today’s report, Scholastic president and CEO Peter Warwick is quoted, saying, “Scholastic’s strong fourth fiscal quarter and full-year results were driven by the success of our strategic and operational initiatives, and the ever-growing demand for our products by children, parents and our long-standing school partners.”
“It’s clear that Scholastic has emerged from the challenges of the pandemic even stronger and better positioned for future sustainable growth,” he says, “as indicated by our higher expectations for fiscal 2023 and the recently announced increase in our regular quarterly dividend. Scholastic’s employees did an amazing job fulfilling our company mission during these uncertain times by embracing every opportunity to increase collaboration and foster innovation.”
Revenues increased 28 percent, Scholastic reports, “driven primarily by the return of in-person book fairs and the historically high revenue-per-fair, as well as the continued growth in educational product sales due to high demand for independent reading for children.”
In book publishing and distribution, book fair revenues increased US$85.1 million “on historically high revenue-per-fair levels,” and this was based on some 72 percent of pre-pandemic fair count.
Trade revenues were up US$6.6 million “primarily driven by key frontlist publishing and backlist titles from the company’s bestselling series.”
Overhead costs increased US$13.4 million, which was primarily related to what the company describes as “an increase in employee-related costs arising from inflationary pressures on labor, including unallocated wages from the company’s Missouri distribution facilities as well as higher accrued bonuses and salary-related benefit costs.”
Warwick concludes, “Looking ahead to fiscal 2023 and beyond, we see continuing demand for our products and services deeply rooted in the fundamental role of our engaging independent reading materials in the learning goals of children.”
And more on the coronavirus COVID-19 pandemic and its impact on international book publishing is here.