Harry Potter's magic lifts Scholastic

CHILDREN'S publisher Scholastic, Pearson's major rival in the US educational books market, posted a narrower first-quarter loss thanks to the record-breaking sales of the latest Harry Potter.

But earnings in its core school books business also grew, on improved sales to school libraries.

The loss was $24.8m (£15m) against $44.6m for the same period a year earlier. Revenue rose 55% to $475m from $307m a year ago, beating forecasts for $422m.

Educational sales for the June-to-August period are traditionally slow, due to schools' summer breaks, but the company still saw a 20% increase in revenue in this division. It has cut capital spending by $26m and chairman Richard Robinson said the firm would meet its target of $40m cuts in 2004.

The Potter effect pushed up overall revenue growth by 55%. But some analysts say the growth in educational book revenue was the result of one-off increases in classroom library spending in New York. 'Sales of the Potter book were more than thought, but there are still concerns that the company's underlying business is still weak,' said one analyst.

Scholastic sold 11m copies of Harry Potter and The Order of The Phoenix, bringing revenue from the series to $170m in the quarter, against $15m a year earlier.

Revenue from media, licensing and advertising slid 4% to $16.1m.