Scholastic (NASDAQ:SCHL) reported a wider adjusted operating loss in its seasonally slow fiscal 2027 first quarter, while reaffirming its full-year outlook as it enters the back-to-school and holiday selling periods with new releases from major franchises and early strength in book fairs.
Revenue declined 4% to $216.8 million from $225.6 million a year earlier. The company recorded an operating loss of $92.2 million, in line with the prior-year period. Adjusted operating loss was $88.7 million, compared with $81.9 million a year earlier, reflecting higher overhead costs that were partly offset by improved results in Entertainment and International.
Net loss was $71.2 million, or $3.77 per diluted share, compared with a $71.1 million loss, or $2.83 per diluted share, in the prior-year quarter. Adjusted net loss was $68.6 million, or $3.63 per diluted share, compared with $63.3 million, or $2.52 per diluted share, a year earlier. Glover said the per-share loss also reflected fewer shares outstanding following repurchase activity in fiscal 2026.
Book fairs and publishing slate
President and Chief Executive Officer Peter Warwick said the first quarter is typically the company’s smallest revenue period because schools are largely out of session and school-based book and education sales are limited. He said the company is now positioned for an “important and promising” second quarter.
Children’s book publishing and distribution revenue declined to $105.8 million from $109.4 million. Book fair revenue was $33.2 million, compared with $34.1 million, primarily due to timing-related effects, while book club revenue increased to $2.1 million from $1.8 million.
Warwick said early fall book-fair indicators were strong, with bookings and fair count ahead of the prior year. The company also cited traction among Christian schools and through other extended fair formats as it seeks to reach new school communities. During the question-and-answer session, Warwick said the number of larger-school fairs had increased and that both returning schools and new locations were contributing to the fair count.
Consolidated trade revenue fell $3 million to $70.5 million, largely because international co-edition sales recorded in the prior year did not recur. U.S. trade revenue, however, rose 4%, supported by Dav Pilkey titles.
The company highlighted a second-quarter schedule that includes an illustrated edition of Harry Potter and the Half-Blood Prince, a new Dog Man title in November, and publishing activity tied to the forthcoming The Hunger Games: Sunrise on the Reaping film adaptation. Warwick said Scholastic is also running a Harry Potter publishing and marketing campaign ahead of a new HBO series planned to premiere around Christmas.
Entertainment gains, education pressure
Entertainment revenue increased to $20.1 million from $13.6 million, driven by higher production revenue. The segment’s adjusted operating loss narrowed to $1.6 million from $4 million. Glover said the segment’s margin profile reflects operating leverage and business mix, as well as fixed depreciation associated with the Self acquisition. The company said production activity and its pipeline of greenlit and contracted projects remained strong.
Education revenue declined to $30.4 million from $40.1 million, as school and district spending on curriculum and supplemental materials remained pressured. Glover cited higher staffing and fixed costs, expanding unfunded mandates and the end of ESSER funding in March. The segment’s adjusted operating loss widened to $23.3 million from $21.2 million, though the company said cost-structure improvements substantially offset the revenue decline.
Scholastic said it is restructuring Education’s products and operations, diversifying its customer base and pursuing a go-to-market transformation intended to improve sales productivity. It expects Education revenue trends to improve later in the year, particularly in the second half, based on key opportunity timing and subscription revenue recognition.
International performance and outlook
International revenue rose to $60.5 million from $59.4 million. Excluding a $1.2 million favorable foreign-exchange effect, revenue was approximately flat. Adjusted operating loss improved to $2.7 million from $4.1 million, aided by cost management and operating efficiencies.
The company expects international revenue growth for the full year, supported by publishing and franchise activity, although operating income is expected to be modestly lower due in part to inflation and higher fuel and freight costs in certain markets. Glover said those costs had already been anticipated in the company’s forecast and were incorporated into its reaffirmed guidance.
Scholastic used $94.6 million in operating cash flow during the quarter and reported free cash use of $110.8 million. Net debt at quarter-end was $86.8 million, down from $242.8 million a year earlier. The company returned about $29.6 million to shareholders during the quarter, including $25.8 million of share repurchases and $3.8 million in dividends. Approximately $157 million remained authorized for future repurchases as of Aug. 31.
Management reaffirmed fiscal 2027 guidance for revenue growth of approximately 2% to 4%, adjusted EBITDA of approximately $135 million to $145 million, and free cash flow of approximately $35 million to $40 million. Scholastic expects year-over-year revenue growth to begin in the second quarter and continue through the remainder of the fiscal year.
About Scholastic (NASDAQ:SCHL)
Scholastic Corporation is a global children’s publishing, education and media company. Founded in 1920 by M. R. Robinson, the company develops and distributes books, classroom materials, digital learning resources and educational media for children, families, teachers and schools.
Its publishing portfolio includes original and licensed children’s books, series and educational titles, while its education business provides classroom magazines, supplemental curriculum materials, professional learning resources and digital platforms.
