One of the world's largest children's book publishers and distributors, Scholastic brings beloved series like Dog Man and Harry Potter to young readers, along with classroom magazines and literacy programs used in U.S. schools. It began in 1920, when founder Maurice Robinson launched a student newspaper from his mother's sewing room in Pennsylvania, naming it "Scholastic" for the students it served. The company is famous for its school book fairs, pop-up bookstores that have turned school gyms into childhood treasures since the early 1980s.
10-K · Fiscal year ended May 31, 2026 · SEC filing ↗
FY2026 net income swung to $56.7M on a $99.7M sale-leaseback gain as revenue fell 2.7% to $1,581.9M
A $99.7M gain swung Scholastic to annual profit despite falling . Revenue declined 2.7% to $1,581.9M and rose 0.1 point to 55.8%, with the gain and lower driving to $56.7M from a $1.9M loss a year earlier. The company ended the year with debt cut to $97.6M and a reorganized children's book business, but the core education kept shrinking.
Key takeaways
was $56.7M versus a $1.9M loss in FY2025, driven by a $99.7M pre-tax non-cash gain on the of the SoHo headquarters and Jefferson City distribution center, plus lower after fell to $0.0M at Q1 end from $275.0M a year earlier.
declined 2.7% to $1,581.9M as Education revenue fell 13.6% to $267.6M on challenging school funding, partially offset by higher Book Fairs and Entertainment revenue.
Section summaries
Business
Scholastic is the world's largest children's book publisher and distributor, operating through four segments: Children's Book Publishing, Education, Entertainment, and International.
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Children's Book Publishing and Distribution (61% of FY2026 ) includes school-based book fairs and clubs, and trade publishing of major franchises like Dog Man and Harry Potter.
Education (16.9% of FY2026 ) provides classroom magazines, literacy programs, and professional services to U.S. schools, with magazine circulation of 10.2 million.
Entertainment (4.2% of FY2026 ) produces and distributes kids' TV/film content, including through the acquired 9 Story Media Group and its Brown Bag Films studio.
was $15.2M, weighed down by $10.9M in asset impairments and write-downs across segments, while SG&A declined $15.1M from prior reorganization savings partly offset by $8.4M higher rent from the sale-leasebacks.
The company recognized a $17.2M loss on the sale of a 26.2% equity interest in a UK children's book publisher, and fell to $50.9M from $124.2M on higher tax payments on the gain and pension contributions.
Scholastic returned over $285M to shareholders via buybacks and dividends, with $268.6M in repurchases cutting total equity to $750.8M from $946.5M, and completed the reorganization of U.S. children's book divisions into a single Children's Book Group.
New risk factors this year cite generative AI displacing traditional publishing, U.S. Department of Education restructuring reducing literacy program demand, and control residing with the Estate of the former CEO through majority Class A Stock ownership.
What changed
FY2025 flagged Education Solutions against a reduced base as state programs met district pullback; FY2026 Education fell 13.6% to $267.6M, confirming the decline continued.
FY2025 flagged Entertainment operating results and Canadian tax credit eligibility for 9 Story; FY2026 Entertainment rose but segment results included $5.2M of the $9.4M year-to-date asset impairments in Q1 and the integration continued.
FY2025 flagged on $250M debt at 6.1% maturing 2030; fell to $0.0M by Q1 FY2026 via repayment and the , with total debt obligations at $97.6M and $75.0M long-term at 5.2% by May 31, 2026.
FY2025 flagged Children's Book Group reorganization outcome; the single U.S. division took effect June 2025 and SG&A savings of $15.1M appeared in FY2026.
Tariffs flagged as ~$10M incremental FY2026 expense appeared in discussion, with cost of goods sold improved to 43.6% from 44.2% on tariff refunds and better use partially offsetting higher tariffs.
What to watch
Education in FY2027 against the $267.6M base as federal funding restructuring and district supplemental spending trends develop.
Rent expense trajectory in SG&A as the leases become recurring operating costs versus the $8.4M increase seen in FY2026.
Entertainment operating results and Canadian tax credit eligibility as 9 Story Media Group integration completes with voting equity capped at 25%.
Incremental tariff expense effect on cost of goods sold in the peak Q4 book fair season after ~$10M was flagged for FY2026.
International (17.5% of FY2026 ) operates in Canada, UK, Australia, New Zealand, and Asia, primarily through school-based channels and local publishing.
The business is highly seasonal, with lower in Q1 and Q3 due to the school-year cycle, and competes on quality, price, and distribution channels.
Generative AI, federal education funding restructuring, and creative talent retention pose material risks to Scholastic's business model and growth.
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Generative AI could displace traditional publishing and educational products, while also creating copyright liability risks from unauthorized use of the Company's works in AI training.
Restructuring or elimination of the U.S. Department of Education and federal funding programs may materially reduce demand for the Company's literacy programs and educational materials.
Failure to maintain relationships with authors, illustrators, and creative talent, or to adapt to new purchasing patterns, could adversely affect trade publishing and entertainment revenues.
The Company's top five U.S. trade customers represent approximately 74% of U.S. trade business, and changes in their purchasing patterns or financial condition could significantly impact profitability.
The acquisition of 9 Story carries execution risk, and the Company may not realize expected synergies or develop successful programming from Scholastic's intellectual property.
Control of the Company resides with the Estate of the former CEO through majority ownership of Class A Stock, limiting Common Stock holders' voting rights on major transactions.
As of May 31, 2026, the company operates 40 book fair warehouses, a primary distribution facility, and 60 international facilities.
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The company completed sale-leasebacks of its SoHo headquarters and Jefferson City distribution facility, entering 15- and 20-year leases with two 10-year renewal options each.
U.S. book fair warehouses total approximately 2.3 million leased square feet across about 40 locations.
The Jefferson City, MO area primary warehouse and distribution facility is leased and spans 1.4 million square feet.
International operations include 60 facilities across Canada, UK, Ireland, Australia, New Zealand, and Asia, with 236,000 owned and 916,000 leased square feet.
Management considers all properties adequate and expects no difficulties in lease renewals or finding alternative space.
Various claims and lawsuits arising in the normal course of business are pending against the Company. The Company accrues a liability for such matters when it is probable that a liability has occurred and the amount of such liability can be reasonably estimated. When only a rang…
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Various claims and lawsuits arising in the normal course of business are pending against the Company. The Company accrues a liability for such matters when it is probable that a liability has occurred and the amount of such liability can be reasonably estimated. When only a range can be estimated, the most probable amount in the range is accrued unless no amount within the range is a better estimate than any other amount, in which case the minimum amount in the range is accrued. Legal costs associated with litigation loss contingencies are expensed in the period in which they are incurred. The Company does not expect, in the case of those claims and lawsuits where a loss is considered probable or reasonably possible, after taking into account any amounts currently accrued, that the reasonably possible losses from such claims and lawsuits would have a material adverse effect on the Company’s consolidated financial position or results of operations. See Note 7, "Commitments and Contingencies," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further discussion.
Revenue fell 3% to $1.58B, but net income swung to $56.7M on sale-leaseback gains and cost discipline.
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Total revenues decreased $43.6M (3%) to $1,581.9M, with Education down $42.2M due to challenging school funding, partially offset by higher Book Fairs and Entertainment.
Cost of goods sold improved to 43.6% of from 44.2%, driven by lower product and royalty costs, tariff refunds, and better utilization.
SG&A declined $15.1M from prior reorganization savings, though higher severance ($4.6M) and rent ($8.4M) from sale-leasebacks partially offset.
A $99.7M pre-tax gain on sale-leaseback of HQ and distribution center, plus lower , drove to $56.7M from a $1.9M loss.
fell to $50.9M from $124.2M due to higher tax payments on the gain and pension contributions; the company returned $285M+ to shareholders via buybacks and dividends.
Liquidity remains strong with $134.9M cash, $324.6M available on a $400M , and a focus on cost management and strategic investments for FY2027.