Education & Distance Learning Enthusiasts- Harcourt's Education Group Sales Jump 3.2% For The Fiscal Year

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Harcourt's Education Group Sales Jump 3.2% For The Fiscal Year

Educational Marketer - January 3, 2000

Fueled primarily by strong performances from its elementary school segments, Harcourt's Education Group finished the fiscal year ended Oct. 31 posting revenue increases of 3.2% to $581.5 million and operating profit gains of 14.2% to $105.4 million, the company reported last month.

Parent company Harcourt General (Chestnut Hill, MA) reported that overall sales for the year rose 15.1% to $2.1 billion and net profits increased 29.8% to $183.8 million. That represented less growth than the previous fiscal year, when revenue from its publishing and educational sectors rose 26% to $1.86 billion.

Harcourt's Higher Education Group reported a sales increase of 3.2% to $366.0 million for the fiscal year, with operating profits posting a staggering gain of 86.1% to $44.0 million.

For the quarter, Education Group sales rose 7.8% to $212.4 million while overall company revenue increased 14% to $683.6 million. Higher Education Group sales for the quarter rose 6.4% to $104.8 million.

In a prepared statement, co-chief executive Brian Knez said the college group's profit gains "reflect strong operating performances by our graduate level test preparation business, our group publisher and our distance learning company."

The Education Group received a big boost this year from the adoption success of its elementary units, which won the K-5 portion of the $107.6 million K-8 math adoption in Texas and the elementary portion of Mississippi's $5.7 million K-8 social studies adoption, according to EM estimates.

Knez credited the elementary segment with boosting group profits for the year, giving particular credit to its math, social studies and health programs.

Harcourt's secondary segment fared less well, however, winning none of the higher grade adoptions EM covered this year in Texas, Mississippi and Tennessee.

Following the earnings announcement, industry analyst Peter Appert, managing director of the investment firm BT Alex. Brown, upgraded Harcourt from a "buy" to a "strong buy."

Appert told EM the upgrade can be traced to a combination of the company's strong fourth quarter; favorable educational funding at the state level; and Harcourt's spin-out of its Neiman-Marcus retail unit. "That in particular gives them the ability to focus on their educational units, which is where the growth and profit potential is right now," he said.

Contact: Harcourt General can be reached at (617) 232-8200.

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