Scholastic (NASDAQ:SCHL) said its fiscal 2026 results reflected stronger underlying profitability despite lower revenue, as the children’s publishing and education company pointed to book fairs, cost discipline and entertainment growth as key offsets to weaker trade publishing comparisons and continued volatility in school spending.
President and Chief Executive Officer Peter Warwick told investors that fiscal 2026 “demonstrated the earnings power of the more focused company” Scholastic has been building. He cited changes in governance, management, organization and capital allocation, including sale-leaseback transactions that generated more than $400 million in net proceeds from real estate assets.
Fourth-quarter revenue fell 6% to $476.1 million. Chief Financial Officer Haji Glover said the decline largely reflected “challenging prior year publishing comparisons in trade” and lower education revenue tied to continued funding volatility, partly offset by growth in book fairs and higher entertainment revenue.
Book fairs remain a key earnings driver
Warwick said Scholastic’s book fairs continued to perform well in fiscal 2026, supported by higher fair count, improved revenue per fair, stronger marketing execution and product mix, and innovation in the fair experience. He said book fairs raised approximately $250 million in cash and in-kind reading resources for schools during the year.
Within children’s book publishing and distribution, fourth-quarter revenue decreased 4% to $276.3 million, while full-year revenue was $964.2 million, approximately in line with the prior year. Book Fairs revenue rose 5% in the fourth quarter to $186.6 million and increased 5% for the full year to $576 million. Glover said Scholastic held more than 103,000 case and shippable fairs during the fiscal year.
Book Clubs revenue declined 70% in the fourth quarter to $12.2 million and fell 11% for the year to $57.1 million, reflecting lower sponsor participation. Glover said the company remains focused on simplifying the program and improving execution as teacher engagement patterns evolve.
Trade Publishing revenue fell 20% in the fourth quarter to $77.5 million and declined 6% for the full year to $331.1 million. Management attributed the decline primarily to comparison with the prior year’s release of “Sunrise on the Reaping,” the fifth book in Suzanne Collins’ “Hunger Games” series.
Warwick said the publishing pipeline for fiscal 2027 includes a new “Dog Man” title in November, new activity tied to “The Hunger Games” and “Harry Potter,” and new publishing in series including “The Baby-Sitters Club,” “Wings of Fire” and “I Survived.”
Education revenue pressured by school funding volatility
Scholastic Education revenue fell 13% in the fourth quarter to $109.2 million and declined 14% for the full year to $267.6 million. Glover said the decline reflected “ongoing funding volatility and continued pressure on school and district spending for supplemental curriculum materials.”
Adjusted operating income in the education segment was $27.9 million in the fourth quarter, down from $31.3 million a year earlier. For the full year, adjusted operating income was $0.2 million, compared with $6.9 million in the prior year. Glover said lower revenue pressured profitability, partially offset by a better cost structure and operating discipline following restructuring.
In response to an analyst question, Warwick said the education segment underperformed expectations because schools and districts did not deliver the late-year spending surge the company had anticipated. He said the company has strengthened its product portfolio, managed expenses and is reorganizing go-to-market activities, including the addition of a new chief revenue officer in the fourth quarter.
“We feel pretty confident that over the full course of the year, not immediately, but over the full course of the year, that we will see very improved performance in this area, assuming that the market doesn’t deteriorate any further,” Warwick said.
Entertainment posts fourth-quarter growth
Scholastic Entertainment revenue rose 42% in the fourth quarter to $21 million, driven by higher production revenue. Full-year revenue increased 8% to $65.7 million. The segment posted adjusted operating income of $0.8 million in the fourth quarter, compared with a loss of $2.1 million a year earlier, though its full-year adjusted operating loss widened to $9.3 million from $7.2 million due to the timing of production activity and revenue recognition.
Warwick said the integration of 9 Story Media Group gave Scholastic a more complete platform for children’s content. He highlighted a new “Clifford the Big Red Dog” animated series expected to premiere on PBS KIDS in 2027 and the development of a live-action “Magic School Bus” film with Legendary Entertainment, with Elizabeth Banks attached to star as Ms. Frizzle.
Warwick also said Scholastic-branded YouTube channels generated 547 million views and more than 6 billion minutes of watch time in fiscal 2026, up 13% and 63%, respectively. The Scholastic TV app reached more than 530,000 downloads and more than 226 million minutes watched.
Capital returns accelerated after sale-leasebacks
Scholastic returned more than $285 million to shareholders during fiscal 2026, including more than $140 million in the fourth quarter. The full-year total included repurchases of approximately 7.3 million shares for $268.6 million through open-market purchases and a modified Dutch auction tender offer, as well as $20 million in regular dividends.
As of May 31, 2026, Scholastic had $183 million remaining under its stock repurchase authorization. The company also announced a 25% increase in its regular quarterly dividend, from $0.20 to $0.25 per share, beginning in the first quarter of fiscal 2027.
Glover said the company ended fiscal 2026 with net cash of $48.9 million, compared with a net debt position of $136.6 million at the end of fiscal 2025. Scholastic had $75 million outstanding under its $400 million unsecured revolving credit facility at year-end.
Fiscal 2027 outlook calls for modest revenue growth
For fiscal 2027, Scholastic expects revenue growth of approximately 2% to 4% compared with fiscal 2026 reported revenue and adjusted EBITDA of approximately $135 million to $145 million. Glover said the midpoint represents about 6% growth versus fiscal 2026 adjusted EBITDA of $132.4 million on a comparable basis reflecting the sale-leasebacks in both periods.
The company expects children’s book publishing and distribution to deliver revenue growth and improved profitability, led by continued strength in book fairs and growth in trade publishing. Education is expected to improve compared with fiscal 2026, with revenue trends stabilizing, particularly in the second half. Entertainment is expected to grow revenue and improve profitability, while international revenue is expected to grow with modestly lower operating income due in part to inflation and higher fuel, freight and labor costs in some markets.
Warwick said fiscal 2027 will be “an execution year” focused on converting the company’s restructuring and strategic changes into renewed revenue growth and higher adjusted EBITDA on a comparable basis.
About Scholastic (NASDAQ:SCHL)
Scholastic Corporation (NASDAQ: SCHL) is a global company dedicated to children’s publishing, education technology and distribution services. The company’s core business encompasses three primary segments: Children’s Book Publishing and Distribution, Education Technology, and International operations. Through its publishing arm, Scholastic produces and distributes a wide range of children’s books, novels, nonfiction titles and classroom magazines under well-known imprints such as Scholastic Press, Graphix and Chicken House.
