Scholastic (SCHL) risk factors, FY2026 10-K

Risks Related to Our Business and Operations

1. 01If we fail to maintain strong relationships with our authors, illustrators and other creative talent, as well as to develop relationships with new creative talent, our business could be adversely affected
2. 02If we fail to adapt to new purchasing patterns or trends, our business and financial results could be adversely affected29% rewritten
3. 03Increases in certain operating costs and expenses that are beyond our control and can significantly affect our profitability could adversely affect our operating performance
4. 04We maintain an experienced and dedicated employee base that executes the Company’s strategies. Failure to attract, retain and develop this employee base could result in difficulty with executing our strategy
5. 05The failure of third-party providers to provide contracted outsourcing of business processes and information technology services could cause business interruptions and could increase the costs of these services to the Company
6. 06Failure to realize anticipated cost savings and benefits from the Company's continuous improvement efforts, or business disruptions as a result of these efforts, could adversely affect our business and financial performance
7. 07The Company's entertainment business depends on key relationships with buyers of film and television content and uncertainty with buyers or changes in demand for film and television content may impact the financial performance of the entertainment business
8. 08Generative artificial intelligence ("Generative AI") technologies pose a broader and more fundamental set of risks to the Company's core business model that the Company may be unable to fully anticipate or mitigateNew
9. 09The Company may not be able to sustain, manage or effectively execute on its strategy with respect to its acquisition of 9 Story, which may impact the Company's financial performance
10. 10A significant amount of goodwill and other identifiable intangible assets have been recorded as a result of acquisitions and the Company may never realize the full carrying value of these assets23% rewritten

Risks Related to Competition

1. 11If we cannot anticipate technology trends and develop new products or adapt to new technologies responding to changing customer preferences, this could adversely affect our revenues or profitability
2. 12Our financial results would suffer if we fail to successfully differentiate our offerings and meet market needs in school-based book fairs and book clubs, two of our core businesses
3. 13The competitive pressures we face in our businesses could adversely affect our financial performance and growth prospects
4. 14Changes in the mix of our major customers in our trade distribution channel or in their purchasing patterns may affect the profitability of our trade publishing business
5. 15The Company invests in authors and illustrators for its trade publication business, and has a history of publishing hit titles. The inability to publish best-selling new titles in future years could negatively impact the Company

Risks Related to Our Financial Condition and Capital Structure

1. 16Changes in interest rates, constraints on access to capital, or deterioration in credit market conditions could adversely affect the Company's financial condition, liquidity, and ability to fund its operations and strategic objectivesNew

Risks Related to Information Technology and Systems

1. 17Privacy breaches and other cyber security risks related to our business could negatively affect our reputation, credibility and business
2. 18Failure of one or more of our information technology platforms could affect our ability to execute our operating strategy

Risks Related to Laws and Regulations

1. 19Our reputation is one of our most important assets, and any adverse publicity or adverse events, such as a violation of privacy laws or regulations, could cause significant reputational damage and financial loss50% rewritten
2. 20These laws vary significantly in scope, application, and enforcement and create a complex and evolving compliance environmentNew
3. 21Restructuring of federal education programs and agencies, including significant changes to or the potential elimination of the U.S. Department of Education, could materially reduce demand for the Company's educational products and adversely affect its Education businessNew
4. 22Failure to meet the demands of regulators, and the associated high cost of compliance with regulations, as well as failure to enforce compliance with our Code of Ethics and other policies, could negatively impact us25% rewritten
5. 23The evolving, fragmented and rapidly changing landscape of Environmental, Social and Governance ("ESG") reporting requirements and environmental regulatory obligations at the federal, state, and international levels could expose the Company to significant compliance costs, fines, penalties, and reputational harmNew
6. 24Changes in tax laws or a change in tax status may result in a loss of government tax credits in the Company's entertainment business

Risks Related to Our Intellectual Property

1. 25The loss of or failure to obtain rights to intellectual property material to our businesses would adversely affect our financial results

Risks Related to External Factors

1. 26Because we procure products and sell our products and services in foreign countries, changes in currency exchange rates, changes in applicable laws and regulations as well as other risks and uncertainties, could adversely affect our operations and financial results56% rewritten
2. 27Certain of our activities are subject to weather and natural disaster risks as well as other events outside our control, which could disrupt our operations or otherwise adversely affect our financial performance

Risks Related to Stock Ownership

1. 28Control of the Company resides in the Estate of our former Chairman of the Board, President and Chief Executive Officer through the Estate's ownership of Class A Stock, and the holders of the Common Stock generally have no voting rights with respect to transactions requiring stockholder approval
2. 29The Company's common stock price may be subject to significant fluctuations