Shareholders of Scholastic
Those numbers, though, which reflect pre-tax severance charges of $3.6 million and $2 million, respectively, are not as bad as they might seem. Last year's revenues received a $170 million boost from the June release of Harry Potter and the Order of the Phoenix. Excluding the magic of Hogwarts, sales actually would have risen by 6%.
The educational publishing segment, which was a bright spot last quarter, again led the charge. Strong demand for the Read 180 learning program, designed to assist struggling readers, helped lift curriculum revenues by 25%, which in turn drove segment revenues 12% higher to $118.2 million. The division was the only one to finish the quarter in the black, with operating income that surged 43% to $22.2 million.
The results elsewhere were somewhat less encouraging. Without Harry Potter, children's book publishing revenues sank to $121.8 million, and losses widened to $65 million from $16.6 million. Sales in the international segment rose 10% to $71.8 million, thanks to favorable currency translation, offsetting a $4.5 million (27%) drop in media, advertising, and licensing revenues.
Scholastic's marketing efforts took a direct hit with the imposition of the federal Do Not Call List, which threatens the viability of the company's Direct-to-Home business. This sales channel represents roughly one-fifth of Scholastic's children's book sales. Other income sources, however, continue to thrive. Revenues from book fairs grew 5% last year, and book clubs had a banner year, with a 15% spike in sales.
Though Scholastic has done a good job of growing the top line, the company's 5.1% operating margins trail competitors such as McGraw-Hill
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Fool contributor Nathan Slaughter owns none of the companies mentioned.