Scholastic (NASDAQ:SCHL) reported Thursday improved second-quarter earnings, helped by rising demand for its children’s books, however it slashed its full-year guidance, sending shares tumbling.
The New York-based company posted net income of $74.9 million, or $2.14 a share, compared with $55.5 million, or $1.51 a share, in the same quarter last year, missing the Street’s view of $2.19 a share.
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Revenue for the children’s book publisher was $675.7 million, up 2% from $660.1 million a year ago, short of average analyst estimates polled by Thomson Reuters of $684 million.
Earnings took a hit from lower sales of educational technology relative to a year ago, as well as higher promotional spending in School Book Clubs and increase investment in digital initiatives.
“While positive, these results were below our plan, reflecting lower spending by school districts and lower than expected revenue in clubs,” said Scholastic CEO Richard Robinson. “For the remainder of the fiscal year, we expect sustained higher service revenue and new products will enable us to hold sales in Scholastic Education level with those a year ago.”
On Wednesday, the company announced an increase in its quarterly dividend of 10 cents a share, up from 7.5 cents, beginning in the third-quarter of 2011.
Based on its year-to-date results, Scholastic cut its fiscal 2011 outlook, now expecting earnings between $1.80 and $2.05, versus its earlier view of $1.95 to $2.20 a share. The company reiterated its revenue view of $1.9 billion to $1.95 billion.