Pear­son sales fall on US course­ware slump


Pear­son Plc, the world’s largest ed­u­ca­tion com­pany, re­ported a 7 per­cent de­cline in com­pa­ra­ble sales for the first nine months of the year amid a slow­down in the keyUS mar­ket for text­books. The stock dropped.

Sales ex­clud­ing the ef­fect of cur­ren­cies and one-time items de­clined be­cause of fall­ing test­ing rev­enue in the US and the UK and weaker de­mand for higher-ed­u­ca­tion course­ware in North Amer­ica, the Lon­don-based com­pany said in a state­ment on Oct 17. Rev­enue in North Amer­ica shrank 9 per­cent.

“Sales in our largest busi­ness, US higher ed­u­ca­tion, are down due to cau­tious buy­ing pat­terns from key re­tail­ers,” Pear­son Chief Ex­ec­u­tive Of­fi­cer John Fal­lon said on a con­fer­ence call with reporters. “This is an in­dus­try­wide is­sue” and is ex­pected to be a tem­po­rary phe­nom­e­non over the next six to nine months, Fal­lon said.

Pear­son, which gets al­most all its profit from ed­u­ca­tion af­ter sell­ing the Fi­nan­cial Times and its half of the Econ­o­mist Group last year, is fac­ing slug­gish de­mand for text­books, dwin­dling US col­lege en­roll­ment and de­clines in its US test­ing busi­ness. The com­pany an­nounced a re­or­ga­ni­za­tion in Jan­uary that in­cludes 4,000 job cuts and higher in­vest­ment in dig­i­tal ser­vices and emerg­ing mar­kets.

Pear­son said trends in US higher ed­u­ca­tion started im­prov­ing in Septem­ber, and the im­prove­ment has con­tin­ued into Oc­to­ber. The com­pany re­it­er­ated its 2016 and 2018 earn­ings tar­gets and said that if cur­rent ex­change rates per­sist un­til the end of the year, it may boost its per-share guid­ance.

Still, the com­pany is con­tend­ing with a shift to on­line learn­ing, caus­ing an­a­lyst con­cerns that its prob­lems aren’t tem­po­rary.

“While earn­ings guid­ance has been re­it­er­ated, the con­tin­ued weak­ness in top-line trends in­creas­ingly make Pear­son look like a news­pa­per- story, prone to a de-rat­ing,” Ian Whit­taker, an an­a­lyst at Liberum Cap­i­tal Ltd in Lon­don, said in a re­search note.

A com­peti­tor of Pear­son in US higher-ed­u­ca­tion course­ware, John Wi­ley & Sons Inc, warned last month that sales had been weaker than an­tic­i­pated in July, an im­por­tant pe­riod lead­ing up to the start of the school year. Other ri­vals have also in­di­cated that Au­gust wasn’t as strong as ex­pected for the seg­ment, which ac­counts for al­most 25 per­cent of rev­enue for Pear­son, Ex­ane BNP Paribas an­a­lysts

de­cline in com­pa­ra­ble sales for Pear­son Plc for the first nine months of the year on Aug 26, 2016.

led by Sami Kassab said in a note last month.

Pear­son, which has 10 buy, seven hold and six sell rec­om­men­da­tions from an­a­lysts, ac­cord­ing to data com­piled by Bloomberg, fell 22 per­cent in the third quar­ter, com­pared with a 4 per­cent gain in the Stoxx 600 me­dia in­dex.


The booth of Pear­son at the 23rd Bei­jing In­ter­na­tional Book Expo

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