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About Scholastic Corporation

Once upon a time, a company grew up to become one of the world's leading children's book publishers. Scholastic Corporation sells books to children in some 165 countries. The company operates through three divisions: Children's Book Publishing and Distribution; Education; and International. The US accounts for about 80% of sales. Scholastic owns the rights to properties such as Goosebumps and The Baby-Sitters Club and is the US distributor of the Harry Potter books, the best-selling children's series of all time. Known for its school book fairs, Scholastic also publishes magazines, textbooks, and software for students and teachers, and produces children's TV shows. The publisher was founded in 1920.

Operations

Scholastic's Children's Book Publishing and Distribution segment accounts for nearly 60% of total revenue. It includes publishing and distributing children's books, e-books, media, and interactive products in the US. The segment also operates a trade channel that includes school book clubs and school book fairs.

The Education segment accounts for about 20% of revenue and covers grades pre-K to 12 in the US. It includes publishing and distributing books and education materials to schools and children's libraries. Materials include print and online reference and classroom magazines and literacy instruction products. The segment also provides consulting services and related products and services (workshops, seminars, coaching) supporting professional development for teachers and administrators.

The International segment houses operations outside the US, including Scholastic's export and foreign rights businesses. The segment accounts for more than 20% of revenue.

Geographic Reach

Scholastic, based in New York, generates more than 20% of sales outside the US. The company has operations in the US and throughout the world including Canada, the UK, Australia, New Zealand, and Asia. Through its export business, Scholastic sells products in approximately 165 countries around the world. The company licenses the rights to select Scholastic titles more than 60 languages to other publishing companies around the world. Scholastic also partners with governments and non-governmental agencies to create and distribute books to public schools in developing countries.

In Asia, operations include educational publishing programs based out of Singapore, as well as the wholly-owned Grolier direct sales business, which sells English language and early childhood learning materials through a network of independent sales representatives in India, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. In addition, Scholastic operates school-based marketing channels throughout Asia; publishes original titles in English and Hindi in India; conducts reading programs inside local schools in the Philippines; and operates a chain of English language tutorial centers in China in cooperation with local partners.

Sales and Marketing

Scholastic has extensive marketing operations throughout the globe. Key activities include school-based book clubs and school-based book fairs. Its trade organization focuses on marketing and selling books to bookstores, internet retailers, mass merchandisers, specialty sales outlets, and other book retailers.

Competitors include numerous other book, e-book, textbook, library, reference material, and supplementary publishers, distributors, and other resellers (including over the internet) of children's books and other educational materials, as well as national publishers of classroom and professional magazines with substantial circulation.

Scholastic's total advertising expense was $85.2 million, $106.8 million and $110.0 million for the years (ended May) 2020, 2019 and 2018, respectively.

Financial Performance

Throughout the five-year period ending in 2020 Scholastic's revenue hovered around $1.6 billion with little to no year-over-year growth. The absence of new Harry Potter titles has stifled the company's top line. During that same period net income fluctuated, culminating with a loss in 2020.

Scholastic posted $1.5 billion in revenue for fiscal 2020, a decrease of 10% from $1.7 billion in 2019. This reflected lower sales in the company's Children's Book Publishing and Distribution segment of $114.9 million, decreased revenues in the Education segment of $10.1 million, and lower local currency revenues in the International segment of $33.9 million, coupled with an unfavorable impact of foreign exchange of $7.9 million.

Net income loss was $43.8 million in 2020. The loss was due to higher operating loss and increase in provision for income tax.

Cash at the end of fiscal year 2020 was $393.8 million. Cash provided by operating activities was $2.1 million for 2020, compared to $116.4 million for the prior fiscal year. Cash used in investing activities was $95.7 million (mainly for additions to property and production expenditures), while cash generated from financing activities was $154.1 million.

Strategy

The company is in the process of implementing a strategic information technology transformation process, requiring diverse levels of relevant expertise and experience. The company relies on a variety of information technology platforms to execute its operations, including human resources, payroll, finance, order-to-cash, procurement, vendor payment, inventory management, distribution and content management systems and its internal operating systems. Many of these systems are integrated via internally developed interfaces and modifications. Failure of one or more systems could lead to operating inefficiencies or disruptions and a resulting decline in revenue or profitability.

In late 2020, Scholastic will publish best-selling auhor J.K. Rowling's new book, The Ickabog, in US and Canada in hardcover and ebook formats, with international editions to follow soon.

Mergers and Acquisitions

In 2019, Scholastic completed the acquisition of a majority ownership interest in Make Believe Ideas (MBI), a UK-based publisher of creative books for young children, by acquiring an additional 46.5% of equity interest in MBI to bring its total ownership interest to 95%. MBI publishes more than 100 titles a year and is known for creating high-quality, affordable books for young children and babies, with distribution largely through mass merchants.

Company Background

Fresh from a stint at his college newspaper, Maurice Robinson returned to his hometown of Wilkinson, Pennsylvania, in 1920 and launched The Western Pennsylvania Scholastic, a newspaper geared toward high school students. By 1922 its circulation had grown to 4,000 -- prompting Robinson to incorporate his business as Scholastic Publishing Company and launch Scholastic, a national version of the newspaper.

The Depression found the unprofitable Scholastic struggling to improve its financial picture. In 1932 the company changed its name to Scholastic Corporation. A cost-cutting program helped it achieve a profit for the first time four years later. Profitability, however, would be fleeting: Accusations that Scholastic's publications promoted Communism prompted some schools to ban them.

During WWII paper rationing compelled Scholastic to print slimmer publications and turn away subscribers. Following the war the company introduced a string of publications and initiated a sales push that permitted it to pay its first dividend in 1951. In the 1950s, while weathering another spate of accusations that the company had Communist leanings, Scholastic continued to expand its list of publications. The company also created two book clubs that decade, launching what would become one of its most successful endeavors. Scholastic next broadened its interests to include instructional materials and hardcover books. The company went public in 1969, allowing it to continue its expansion.

Scholastic Corporation

557 Broadway Lbby 1
New York, NY 10012-3999
Phone: 1 (212) 343-6100

Firm Stats

Employer Type: Publicly Owned
Stock Symbol: SCHL
Stock Exchange: , NASDAQ
CIO: Arun Abraham
EVP, Chief Administrative Officer, and CFO: Maureen O'Connell
Chairman, President, and CEO: Richard Robinson
Employees (This Location): 9
Employees (All Locations): 8,300

Major Office Locations

New York, NY

Other Locations

Birmingham, AL
Maumelle, AR
Phoenix, AZ
Anaheim, CA
Baldwin Park, CA
Fremont, CA
Fresno, CA
Irwindale, CA
Redwood City, CA
Sacramento, CA
San Diego, CA
Aurora, CO
Loveland, CO
Danbury, CT
Jacksonville, FL
Lake Mary, FL
Pompano Beach, FL
Tallahassee, FL
Covington, GA
Kennesaw, GA
Aiea, HI
Des Moines, IA
Roselle, IL
Saint Charles, IL
Indianapolis, IN
Shawnee Mission, KS
Baton Rouge, LA
Clinton, MA
Odenton, MD
Saco, ME
Caledonia, MI
Fenton, MO
Jefferson City, MO
Neosho, MO
Saint Louis, MO
Charlotte, NC
Greensboro, NC
Raleigh, NC
La Vista, NE
Cranbury, NJ
Secaucus, NJ
Albuquerque, NM
Las Vegas, NV
North Las Vegas, NV
Deer Park, NY
Liverpool, NY
New York, NY
Strongsville, OH
West Chester, OH
Portland, OR
Homestead, PA
Middletown, PA
West Columbia, SC
Alcoa, TN
La Vergne, TN
Arlington, TX
College Station, TX
El Paso, TX
Irving, TX
Jersey Village, TX
Lubbock, TX
Robinson, TX
Schertz, TX
Spokane Valley, WA
Milwaukee, WI
Bengaluru, India
Gurgaon, India
Kolkata, India
Mumbai, India
New Delhi, India
Pune, India
Aurora, Canada
Brockville, Canada
Calgary, Canada
Dartmouth, Canada
Edmonton, Canada
Gloucester, Canada
Kelowna, Canada
Lachine, Canada
Mississauga, Canada
Moncton, Canada
Newmarket, Canada
Oka, Canada
Saskatoon, Canada
Sherwood Park, Canada
Surrey, Canada
Toronto, Canada
Truro, Canada
Vancouver, Canada
Winnipeg, Canada
Woodstock, Canada
London, England
Manchester, England
Southam, England
Wellington, England
Singapore, Singapore