In Scholastic’s [SCHL] fiscal second quarter, the company reported sales of $661.6 million, down $27 million overall (or a little under 4 percent), though just a 1 percent decline in revenue from continuing operations. But adjusted earnings were 40 cents a share lower than analysts were expecting and the company revised its earnings guidance from continuing operations for the fiscal year downward to $1.20 to $1.50 per share from $1.75 to $2.10 per share. The stock was trading significantly lower this morning as a result.
They also announced a reduction in their spending plan for the balance of fiscal 2009 by another $20 million “by eliminating management bonuses and reducing all categories of discretionary spending.”
Earnings from continuing operations fell 29 percent, at $58.4 million or $1.55 per diluted share compared to $82.3 million or $2.10 per diluted share a year ago. Operating income from continuing operations was $107.8 million, compared to $138.9 million a year ago; consolidated earnings, which include a loss from discontinued operations, were $43 million, down from $75.6 million.
Among the impairments to income cited were “higher royalty reserves and increased allowances for doubtful accounts in domestic and international trade publishing operations” which “impacted operating income by $6.3 million.” Other costs cited include “severance and one-time expenses associated with the company’s cost reduction plans” of almost $11 million and unfavorable foreign exchange.