Pearson pounded after COVID hits U.S. community college enrolment
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[October 15, 2021] By
Kate Holton
LONDON (Reuters) -Global education group
Pearson said enrolments at community colleges in the United States had
been hit by a recent surge in COVID-19 cases and a tight labour market,
limiting growth and sending its shares to their lowest level since
January.
In a key trading update covering the period when students buy textbooks
and materials for the academic year ahead, Pearson said revenue from its
U.S. Higher Education Courseware had fallen by 9% in the first nine
months.
Pearson said it remained on course for its full-year targets, however,
as demand for Virtual Learning and English Language Learning helped
sales to rise by 14% and 15% respectively.
Its new Pearson+ app was also being used by more than two million
people. "That's pretty good going for 12 weeks," CEO Andy Bird told
Reuters.
Shares in the group were down 10% at 657 pence, marking a disappointment
for the former Disney executive Bird who has been running the group for
almost a year.
![](http://archives.lincolndailynews.com/2021/Oct/15/images/ads/current/humanesociety_sda022411.png)
"We are left with a slight sense of ‘what might have been': had
enrolments been more robust, we would surely have been talking about
consensus upgrades," analysts at Citi said. They rate Pearson a 'Buy'."
Ian Whittaker, an independent analyst, said with a new reporting
structure and only growth rates given, it was difficult to track quite
how the company had performed in the third quarter.
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![](../images/101521pics/2021-10-15T061310Z_1_LYNXMPEH9E07D_RTROPTP_4_PEARSON-OUTLOOK_small.JPG)
The company logo is
displayed outside the Pearson offices in London, Britain August 4,
2017. REUTERS/Neil Hall/File Photo
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He noted that revenues at the U.S. Higher Education Courseware division, often
the source of Pearson profit downgrades in recent years, was down 9% in the nine
months, compared with a 2% fall in the first half of the year.
Having been buffeted by rental markets and second-hand options for
once-expensive textbooks, Pearson has embarked on a direct-to-consumer strategy
offering unlimited access to content to provide more reliable subscription
revenues.
It hopes that the new app, which launched in the United States in July, will
also deter students from buying second-hand books that had eaten into its
profit.
Trying to broaden its appeal, it is also pitching itself as a consumer-facing
group offering training and skills for life beyond its core schools and college
remit. Its assessment and qualifications revenue rose 24%.
Overall, group underlying revenue rose by 10% for the nine-months, down from 17%
in the first six months, due to tough comparatives for the third quarter. The
full-year consensus had been for adjusted operating profit of 377 million
pounds.
(Reporting by Kate Holton, Editing by Paul Sandle and Alexander Smith)
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