Scholastic cuts 2013 guidance
NEW YORK (AP) — Children's book publisher Scholastic Corp. lowered its 2013 profit guidance and said revenue will be $100 million lower than expected because schools are spending money on curriculum and holding back on orders, fearing federal spending cuts.
Shares fell $6.34, or 20 percent, to $25.50 in light after-hours trading.
The company also said sales are lower than expected for The Hunger Games trilogy as well as in its Book club business. And Superstorm Sandy hurt business in its School Book Fair and School Book club businesses in the Northeast.
Scholastic now expects to earn $1.40 to $1.60 per share for the year ending May 31, down from its prior forecast of $2.20 to $2.40 per share.
It expects revenue of $1.8 billion to $1.9 billion, down from an earlier outlook for $1.9 billion to $2 billion.
Scholastic cited two top reasons for the shortfall. One is that schools are spending money on training to get ready for Common Core, a set of uniform benchmarks for math and reading. That's leaving less money for spending that would go to its profitable educational technology products.
Scholastic also said schools are delaying spending decisions "due to continued uncertainty regarding the federal budget." A series of automatic spending cuts and tax increases are set to take effect at the beginning of 2013 unless Congress and the White House can make a deal to avert them.
Scholastic plans to announce fiscal second-quarter results in mid-December.