Overall sales for Pearson fell 7% in the first 9 months of 2016, due to further inventory corrections by retailers in North American Higher Education courseware in July and August. Pearson noted that trends improved in September and, so far, into October.
Sales are trending lower than expectations in the North American Higher Education courseware business, but a tight focus on discretionary costs means that the cost base is also lower than expected.
Sales declined 3% in headline terms due to the strength of the US Dollar against Sterling and declined 10% at Constant Exchange Rates (CER).
More than 90% of its targeted headcount reduction (4,000 full-time equivalent employees) have been notified of their termination dates. The company still expects to incur restructuring costs of approximately £320m in 2016 and to generate annualized savings of approximately £350m, with approximately £250m of these savings in 2016 and a further £100m in 2017.
In 2015, Pearson generated approximately 63% of its sales in the US, 6% in Greater China, 5% in the Euro zone, 3% in Brazil, 2% in Canada, 2% in Australia, 2% in South Africa and 1% in India.
Pearson’s investments in new digital products and services, including five new Connections virtual charter school partnerships and a second online degree partnership in the UK, are building the company’s future growth potential.
The company reiterated full-year guidance and said it's making no changes to its 2018 goals: "Our markets have been challenging but we are managing discretionary costs tightly."
Pearson shares declined -8.3% on the news.
For more information see the
full report.