Scholastic’s third quarter results fell short of Wall Street’s expectations, prompting a negative market reaction. Management attributed the underperformance to the seasonality of its business, with schools out of session and sales particularly light in its Children’s Books and Education divisions. CEO Peter Warwick emphasized that this period typically contributes a small portion of annual revenue, while noting that the quarter also reflected the full impact of sale-leaseback transactions completed last year. Additionally, lower revenues in Education and Children’s Books were only partially offset by growth in the Entertainment segment.
Is now the time to buy SCHL? Find out in our full research report (it’s free for active Edge members).
Scholastic (SCHL) Q3 CY2026 Highlights:
- Revenue: $216.8 million vs analyst estimates of $224.7 million (3.9% year-on-year decline, 3.5% miss)
- Adjusted EPS: -$3.63 vs analyst expectations of -$3.42 (6.1% miss)
- Adjusted EBITDA: -$63.6 million (-29.3% margin, 14.2% year-on-year decline)
- EBITDA guidance for the full year is $140 million at the midpoint, in line with analyst expectations
- Operating Margin: -39.6%, up from -40.6% in the same quarter last year
- Market Capitalization: $618.2 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Scholastic’s Q3 Earnings Call
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Brendan Michael McCarthy (Sidoti & Company) asked if higher fuel costs in international markets were a new headwind and how they were incorporated into guidance. CFO Haji Glover clarified these costs were anticipated and already factored into full-year forecasts.
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Brendan Michael McCarthy (Sidoti & Company) inquired about the Entertainment segment’s margin expansion. Glover attributed improved margins to operating leverage and a favorable business mix, with fixed depreciation from past acquisitions also influencing results.
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Brendan Michael McCarthy (Sidoti & Company) sought details on Book Fairs’ early-season performance and the success of new fair models. CEO Peter Warwick reported strong engagement and expansion into new school formats, with both returning and first-time schools participating.
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Brendan Michael McCarthy (Sidoti & Company) asked whether increases in fair participation were driven by new schools or repeat engagements. Warwick stated that both factors contributed positively to the overall fair count.
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No other analysts participated in the Q&A portion.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the execution and sales impact of major franchise launches in Trade Publishing, (2) the trajectory of Book Fairs’ expansion into new formats and school segments, and (3) progress on restructuring and commercial effectiveness in the Education segment. Continued margin performance in international markets, particularly in the face of rising fuel costs, will also be a critical signpost for near-term profitability.
Scholastic currently trades at $33.24, down from $34.83 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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