Scholastic Corporation released its fiscal 2026 third‑quarter results on March 19, 2026, reporting a net loss of $3.5 million and a diluted earnings loss of $0.15 per share. The loss beat the consensus estimate of a $0.37 per share loss, while revenue of $329.1 million fell 2% year‑over‑year to $329.1 million, missing the consensus estimate of $331.04 million.
Revenue decline was driven by a 3% drop in the Children’s Book Publishing and Distribution segment and a 2% decline in Education Solutions. Book‑fair revenue per fair rose 5%, and the Entertainment segment grew 25%, partially offsetting the weakness in Trade publishing, which fell 10%. The company’s operating loss widened to $24.3 million, up 13% from $20.9 million a year earlier, largely due to the impact of the sale‑leaseback transaction that increased lease expense and eliminated rental income.
The sale‑leaseback of Scholastic’s New York City headquarters and Jefferson City distribution center generated $401 million in net proceeds and is expected to reduce adjusted EBITDA by about $14 million on a partial‑year basis in fiscal 2026, with a $6.7 million impact in Q3. Despite the operating loss, the company reaffirmed its full‑year adjusted EBITDA guidance of $146 million to $156 million, unchanged from prior guidance, indicating confidence that the capital‑return strategy will not materially erode profitability.
The board authorized a $200 million modified Dutch auction tender offer with a price range of $36 to $40 per share, scheduled to begin on March 23 and expire on April 20. The program follows an earlier open‑market repurchase of $147 million, nearly exhausting a $150 million authorization, and reflects Scholastic’s commitment to returning capital to shareholders while supporting the stock price.
CFO Haji Glover noted that the sale‑leaseback transactions reduce adjusted EBITDA by about $14 million in fiscal 2026, primarily due to incremental lease expense and the elimination of rental income. CEO Peter Warwick emphasized that the company is progressing through its transformation, integrating its publishing group and restructuring Education Solutions, and expects a return to profitability in Q4 after the seasonal operating loss in Q3.
Investors reacted to the earnings with a mix of optimism and caution. The EPS beat was highlighted as a positive sign of cost discipline, while the revenue miss and the impact of the sale‑leaseback on operating profitability tempered enthusiasm. Analyst B. Riley downgraded Scholastic from Buy to Neutral, citing valuation concerns, which contributed to a cautious market stance.
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