LONDON—Shares in Pearson PLC tumbled on Monday after the educational publisher said weaker-than-expected trading in the higher-education sector in North America weighed down on nine-month sales.
The U.S.-focused educational-products specialist, which has undergone a prolonged bout of restructuring including multibillion-dollar asset sales, said revenue fell 7% in the nine months to end-September from the same period last year when adjusted for changing exchange rates and mergers and acquisitions.
The decline was just 3% when currency factors, notably the dollar’s strength against the British pound, were included, the U.K.-based Pearson said.
Weaker sales reflected “expected” declines in revenue from student-testing contracts in the U.S. and U.K., two of its most important markets, Pearson said. The company also recorded declines in North American higher-education courseware, reflecting a further draw down of inventories by retailers in July and August.
Pearson said its Penguin Random House publishing business performed better, partly from movie-tie-in sales for books such as The Girl on the Train by Paula Hawkins in addition to best-selling new work by authors Colson Whitehead and John Le Carré.
“Our markets have been challenging, but we are managing discretionary costs tightly,” Pearson said, with no plans to change its earnings outlook for the full year or medium-term targets.
Investors were taken aback by the poor performance of Pearson’s North American business. The stock fell as much as 10% in morning trading in London.
http://www.wsj.com/articles/pearson-shares-plummet-on-weak-u-s-education-sales-1476702298