Scholastic Corporation (SCHL) Q1 2027 Financial Results Summary
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Scholastic Corporation (SCHL) Q1 2027: Revenue Decline, Operating Losses Persist — Cautiously Disappointed
In its fiscal first quarter ended August 31, 2026, Scholastic Corporation reported a revenue decline of $8.8 million, or -4%, year-over-year, with total revenues of $216.8 million compared to $225.6 million in the prior year. This performance reflects ongoing challenges in the Education and Children’s Book Publishing segments, alongside the impact of recent sale-leaseback transactions.
The quarter's results are disappointing for shareholders, primarily due to the continued revenue decline and significant operating losses. The company reported an operating loss of $92.2 million, consistent with the prior year, but the adjusted operating loss increased to $88.7 million from $81.9 million, indicating a deterioration in operational efficiency.
Key Financial Metrics:
- Total Revenue: $216.8 million (down $8.8 million or -4% YoY)
- Operating Loss: $92.2 million (unchanged YoY)
- Adjusted Operating Loss: $88.7 million (up $6.8 million YoY)
- Adjusted EBITDA: Loss of $63.6 million (compared to a loss of $55.7 million YoY)
- Net Income: Loss of $71.2 million (compared to a loss of $71.1 million YoY)
- Free Cash Flow: Use of $110.8 million (compared to $100.2 million in the prior year)
Segment Performance:
- Children’s Book Publishing and Distribution: Revenues decreased by $3.6 million to $105.8 million. The segment's operating loss was $38.2 million, up from $35.1 million in the prior year.
- Education: Revenues fell by $9.7 million to $30.4 million, with an operating loss of $23.3 million, compared to $21.2 million in the prior year.
- Entertainment: Revenues increased by $6.5 million to $20.1 million, with an improved operating loss of $1.8 million, down from $4.0 million in the prior year.
- International: Revenues rose by $1.1 million to $60.5 million, with an operating loss of $2.9 million, improved from $4.2 million in the prior year.
Shareholder Returns and Guidance:
During the quarter, Scholastic returned approximately $29.6 million to shareholders through share repurchases and dividends, including the repurchase of 630,850 shares for $25.8 million and $3.8 million in dividends. The company has $157.4 million remaining authorized for future repurchases.
Looking ahead, Scholastic has affirmed its fiscal 2027 guidance, projecting revenue growth of approximately 2% to 4% and Adjusted EBITDA of approximately $135 million to $145 million. The company also expects Free Cash Flow of approximately $35 million to $40 million.
Analyst View:
While Scholastic's affirmation of its full-year guidance provides some reassurance, the current quarter's performance raises concerns about the company's ability to navigate ongoing challenges in its core segments. The decline in revenues, coupled with increased operating losses, suggests that the company may face headwinds in achieving its growth targets. Investors should closely monitor the upcoming quarters for signs of recovery, particularly in the Education segment, which has been under pressure from budget constraints.
Forward Catalyst:
Investors should watch for updates on Scholastic's performance in the back-to-school season, as this period is critical for the company. Additionally, any developments regarding cost management initiatives and the impact of the sale-leaseback transactions on future earnings will be crucial in assessing the company's trajectory moving forward.
Note: The following tables present amounts in millions.
| Three months ended 08/31/26 | Three months ended 08/31/25 | |
|---|---|---|
| Revenues | $216.8 | $225.6 |
| Operating costs and expenses: | ||
| Cost of goods sold | $118.1 | $123.5 |
| Selling, general and administrative expense | $178.3 | $177.2 |
| Depreciation and amortization | $12.6 | $16.3 |
| Asset impairment and write downs | $— | $0.8 |
| Total operating costs and expenses | $309.0 | $317.8 |
| Operating income (loss) | $-92.2 | $-92.2 |
| Interest income (expense), net | $-1.6 | $-4.5 |
| Other components of net periodic benefit (cost) | $0.1 | $-0.3 |
| Earnings (loss) before income taxes | $-93.7 | $-97.0 |
| Provision (benefit) for income taxes | $-22.5 | $-25.9 |
| Net income (loss) | $-71.2 | $-71.1 |
| Basic and diluted earnings (loss) per share of Class A and Common Stock(1) | ||
| Basic | $-3.77 | $-2.83 |
| Diluted | $-3.77 | $-2.83 |
| Basic weighted average shares outstanding | 18,862 | 25,161 |
| Diluted weighted average shares outstanding | 19,589 | 25,410 |
(1) Earnings (loss) per share are calculated on non-rounded net income (loss) and shares outstanding. Recalculated earnings per share based on numbers rounded to millions may not yield the results as presented.
| 08/31/26 | 08/31/25 | |
|---|---|---|
| Cash and cash equivalents | $106.3 | $94.3 |
| Accounts receivable, net | $186.5 | $187.0 |
| Inventories, net | $315.2 | $322.2 |
| Prepaid expenses and other current assets | $150.8 | $175.8 |
| Total current assets | $658.8 | $779.3 |
| Property and equipment, net | $171.0 | $181.0 |
| Other assets | $68.0 | $86.6 |
| Total assets | $899.0 | $1,047.0 |
| Accounts payable | $184.0 | $331.2 |
| Accrued expenses and other liabilities | $16.3 | $14.2 |
| Total current liabilities | $200.3 | $345.4 |
| Long-term debt | $86.8 | $242.8 |
| Total liabilities | $287.1 | $588.2 |
| Stockholders’ equity | $611.9 | $458.8 |
| Total liabilities and stockholders’ equity | $899.0 | $1,047.0 |
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