WASHINGTON: Pearson blamed a “temporary” fall in demand for textbooks on US college campuses for a larger than expected decline in revenues in the last three months. The education group said on Monday an “inventory correction” at bookstores across America had driven a 7 per cent drop in underlying revenues. In the US sales at constant exchange rates declined 13 per cent in the three months to the end of September.
Pearson’s chief executive John Fallon said in a trading update that he was confident demand from college bookstores would return, adding there had been no “fundamental change” in the behaviour of students and teachers. But the fall will add to fears that the company is battling a big structural shift as courseware shifts online and students increasingly rent textbooks or buy them in digital formats.
Pearson’s shares fell 8.7 per cent to close at 761p. One top 20 investor said: “The underlying strength in trading looks weak. [The company] is cutting costs, but the worry is that it will need to do more cost cuts to ease the short term pressures on its business.”
However, another top 20 shareholder said: “Our view remains positive. The balance sheet remains strong and new products appear to be gaining share.”fell 10 per cent in morning trading on Monday in London, to 750p. This year John Wiley and Barnes & Noble Education have also reported sharp falls in textbook sales.
“This is an industry wide issue,” said Mr Fallon. “It’s essentially college campus bookstores across America managing their supply more efficiently. We see this as a temporary phenomenon. “We are offsetting this by managing our cost base very effectively. That’s why we can say we are on track to hit our guidance for 2016 and 2018.”
