Scholastic cuts full-year forecast for second time
(Reuters) - Children's books publisher Scholastic Corp cut its full-year forecast for the second time as sales of its "Hunger Games" trilogy remained lower than last year and customers continued to delay spending on its educational products.
Shares of Scholastic, which also publishes the Harry Potter series in the United States, fell 14.4 percent in early trading on the Nasdaq.
"We expect sequential improvement next year but see sequestration risk for educational publishing ... we expect shares to be under pressure," Stifel Nicolaus analyst Drew Crum wrote in a post-earnings note.
School budgets for the year have been lowered as sequestrations — across-the-board government spending cuts — kicked in on March 1.
Scholastic said on Thursday that it now expects revenue of $1.75 billion to $1.80 billion for the year ending May and earnings of $1.10 to $1.30 per share, excluding items, from continuing operations.
It reduced its full-year forecast in November to earnings from continuing operations of between $1.40 and $1.60 per share, excluding items, on revenue of about $1.8 billion to $1.9 billion.
Scholastic had cut jobs, stopped hiring, and scrapped bonus for its management in December as schools, afraid of the "fiscal cliff," reduced spending on educational products.
The company on Thursday reported a quarterly net loss from continuing operations of $20.1 million, or 63 cents per share, that almost doubled from $9.9 million, or 32 cents per share, a year earlier.
Revenue for the third quarter fell 22 percent to $380.5 million. Revenue from Scholastic's children's book publishing and distribution business fell 30 percent to $189.4 million, primarily because of lower sales of the "Hunger Games" trilogy.
The company invested more on digital initiatives, including an iPad version of its Read 180 program for improving reading skills and a new program called iRead.
Shares of the Broadway, New York-based company were down 13 percent at $27.06 on Nasdaq early on Thursday morning after touching a low of $26.60. They have fallen about 15 percent in the last year, excluding Thursday's losses.
(Reporting by Neha Alawadhi in Bangalore; Editing by Joyjeet Das)