Scholastic’s Adjusted Loss Widens to $3.63 a Share as Revenue Falls 4%

Key Facts

Scholastic reported an adjusted loss of $3.63 a share for its fiscal first quarter ended August 31, 2026, wider than analysts’ expected loss of $3.42. Revenue fell 4% to $216.8 million from $225.6 million a year earlier and missed expectations of about $224.7 million. The company therefore fell short on both adjusted earnings per share and sales, even though the summer quarter is seasonally small for parts of its business. Its adjusted per-share loss widened from $2.52 a year earlier, showing weaker profitability than the revenue decline alone conveys. Scholastic nevertheless affirmed its fiscal 2027 outlook, putting the back-to-school and fall selling season at the center of the next test.

The adjusted loss used in the comparison with analysts’ estimates differs from the result reported under US accounting rules. Scholastic’s reported diluted loss was $3.77 a share, against $2.83 a year earlier, after including items excluded from its adjusted measure. Its reported operating loss, however, was unchanged at $92.2 million in both periods, a different picture from the adjusted per-share comparison. The adjusted operating loss widened to $88.7 million from $81.9 million after one-time charges were removed from each period. Investors need both measures because the per-share result and operating loss describe different parts of the earnings outcome.

The pressure on earnings becomes clearer when lower sales are set against the costs carried through the summer quarter. Revenue declined by $8.8 million from a year earlier, while the adjusted operating loss increased by $6.8 million. When operating costs do not fall as quickly as sales, part of the lost revenue flows through to a larger operating loss, even in a seasonal business. That relationship matters at Scholastic because Book Fair activity is limited in the first quarter ahead of the busier school and fall season. The question for investors is whether later sales will cover expenses incurred before the busiest part of the year.

Revenue in Children’s Book Publishing and Distribution fell by $3.6 million to $105.8 million. Book Fair revenue was $33.2 million, down from $34.1 million a year earlier, during a quarter when school activity is normally limited. Consolidated trade revenue declined by $3.0 million to $70.5 million; Scholastic said the prior period benefited from international co-edition sales that did not recur. Book Club revenue rose to $2.1 million from $1.8 million, but the gain did not offset the declines in the larger channels. The segment’s adjusted operating loss widened to $37.8 million, connecting the sales weakness to its profitability.

Education was the largest source of pressure on group sales, with revenue down $9.7 million to $30.4 million. Scholastic attributed the decline to continued strain on school and district funding and spending on supplemental curriculum materials. The segment’s operating loss increased to $23.3 million from $21.2 million, despite some benefit from its improved cost structure. Those figures show that lower expenses softened the effect of weaker demand without eliminating it in the quarter. For the full-year outlook, an improvement in school orders matters because sustained weakness in Education would leave books and entertainment carrying more of the recovery.

Entertainment provided some offset: its revenue rose by $6.5 million to $20.1 million, supported by higher production revenue. Its adjusted operating loss narrowed to $1.6 million from $4.0 million, indicating that the sales gain improved the segment result. International revenue rose by $1.1 million to $60.5 million, although Scholastic said it was roughly flat after excluding a favorable $1.2 million currency effect. The adjusted operating loss in International narrowed to $2.7 million, which the company attributed to cost management and operating efficiencies. These gains show that weakness was uneven across the business, but they were insufficient to prevent the group revenue decline.

Year-over-year profitability also needs adjustment for property sale-and-leaseback transactions completed in December 2025. Scholastic said the current quarter bears a full period of their effects, while the reported year-earlier comparison does not. Its adjusted loss before interest, taxes, depreciation and amortization widened to $63.6 million from $55.7 million on the direct comparison. On a comparable basis that applies the transactions to the earlier period, the prior loss would have been $64.2 million, implying a $0.6 million improvement. That distinction limits how much operating deterioration can be inferred from the unadjusted year-over-year change in this measure.

Cash use also increased: operating activities consumed $94.6 million, compared with $81.8 million a year earlier. Free cash use reached $110.8 million from $100.2 million, alongside higher working-capital needs and capital spending. At the same time, net debt stood at $86.8 million, below $242.8 million a year earlier after the balance sheet benefited from proceeds of the sale-and-leaseback transactions. Scholastic returned about $29.6 million to shareholders through buybacks and dividends during the quarter. For shareholders, the combination of heavier seasonal cash use and lower net debt means earnings alone do not capture the company’s capacity to fund its plans.

SCHL closed at $35.36 on September 23, 2026, after trading between $34.64 and $35.54 that day, according to EL7 data. That price predates the September 24 earnings release and provides a reference point for what investors knew before the report. The adjusted earnings miss and weaker sales give investors reason to reassess future profit expectations, especially if pressure in Education persists. Affirmed full-year guidance offers a counterweight if early indications of fall demand turn into completed sales. That balance is relevant to holders, prospective buyers and short sellers without treating a pre-release trading session as a reaction to the results.

Scholastic maintained its fiscal 2027 forecast for revenue growth of 2% to 4% and adjusted earnings before interest, taxes, depreciation and amortization of $135 million to $145 million. It also continued to expect full-year free cash flow of $35 million to $40 million despite the first-quarter cash use. Management said Book Fair bookings entering the second quarter were ahead of a year earlier, an early indicator that must still translate into revenue as events take place. The back-to-school and fall results will test whether book sales can offset the Education weakness and operating costs evident in the summer quarter. If bookings fail to become sales and improve cash generation, the annual forecast becomes harder to meet; progress on both would support the seasonal explanation for the quarterly loss.