Pearson slips 8pc as death of text books hurts sales

SHARES at publisher Pearson fell 8pc yesterday as it blamed a slump in textbook sales on fewer people going to university.

The company, which supplies educational material in the UK and America, said strong employment levels had seen many potential students find work instead of going to university.

Sales fell 7pc in the first nine months of the year and 9pc in North America. Analysts had forecasted a 5pc drop.

Pearson said sales were further hit by students using the internet to buy cheap second-hand books and access free material.

It blamed falling sales in the UK on the shift in Government policy towards summer exams.

The company is not the first publisher to be hit by dwindling demand. Earlier this year, John Wiley and Barnes & Noble Education also reported a sharp fall in textbook sales.

Pearson, which last year sold its newspaper titles, the Financial Times and The Economist, before rebranding to become solely focused on education, has struggled to turn its new ethos into sales. The company is one of this year’s worst performers in the FTSE 100, having lost a third of its market value over the past 12 months and issued four profit warnings in three years.

Chief executive John Fallon, who was appointed in 2012, is spearheading a restructuring that will cut 4,000 jobs and cost £320m to implement. The company said it expects to save £250m by the end of 2016 and a further £100m in 2017.

However Pearson, which generates 63pc of sales from the US, said it has been boosted by the decline in the pound, adding that if current exchange rates persist it expects earnings per share to increase by about 4.5p to as much as 59.5p.

Fallon also insisted it was on track to hit its target of £600m operating profit in 2018. He said: ‘Our competitive performance remains strong in a tough market. We have achieved more than 90pc of the growth and simplification restructuring programme we announced in January.

‘While market conditions continue to be challenging, we are on track to achieve our long-term growth goal.’