Scholastic Corporation (NASDAQ: SCHL) reported a widening first-quarter fiscal 2027 loss on Thursday, September 24, 2026, as revenue declined and operating costs persisted despite a strong performance in its entertainment segment. The company’s adjusted loss per share rose to $3.63 from $2.52 in the same period a year earlier, while total revenue fell 4% to $216.8 million, down $8.8 million from $225.6 million in Q1 FY2026. Operating loss remained flat at $92.2 million, with adjusted operating loss widening to $88.7 million from $81.9 million, marking an 8% deterioration in profitability relative to the prior year. Adjusted EBITDA also declined, posting a loss of $63.6 million compared to $55.7 million in Q1 FY2026—a 14% drop—while free cash use increased to $110.8 million from $100.2 million. Net debt decreased significantly to $86.8 million from $242.8 million, reflecting a $156 million reduction, though debt levels were still elevated due to prior financing needs. Sale-leaseback transactions in fiscal 2026 generated over $400 million in net proceeds, helping to reduce long-term obligations.
The company’s segment performance highlighted mixed results. Children’s book publishing and distribution, its largest segment, saw revenue decline 3% to $105.8 million, with school reading events down 2% and consolidated trade revenues falling 4%. Adjusted operating loss in this segment widened 10% to $37.8 million. Education Solutions revenues plummeted 24% to $30.4 million, while adjusted operating loss increased 10% to $23.3 million. In contrast, entertainment revenues surged 48% to $20.1 million, driven by tie-ins to HBO’s Harry Potter series and new releases like A Sprinkle in Time, a Dog Man book scheduled for November. Adjusted operating loss in entertainment narrowed sharply to $1.6 million from $4.0 million, with one-time items contributing $0.2 million. International operations posted a 2% revenue increase to $60.5 million, with adjusted operating loss narrowing 34% to $2.7 million.
Scholastic affirmed its full-year guidance for fiscal 2027, projecting revenue growth between 2% and 4%—equivalent to approximately $1.63 billion to $1.66 billion—based on Q1 FY2026 results. Adjusted EBITDA guidance remains at $135 million to $145 million, while normalized free cash flow is expected to range between $35 million and $40 million. The company also noted the expiration of ESSER funding in March 2026, which had supported certain educational initiatives.
Stock performance reflected the financial results, with Scholastic’s shares closing at $34.86 on the day of the presentation, down 0.50% from the prior session. After-hours trading showed a further decline of 12.69% to $30.41, marking a 12.43% drop from the regular session close. The stock’s 52-week range spans $25.91 to $48.07, indicating continued volatility amid ongoing challenges in its core business segments.
