With the recession and cuts in public spending, many schools around the country ended up being impacted. For many districts the state budget cuts led to school boards having to delay adopting new curriculum guidelines and put off spending money on any instructional materials that would have met those new guidelines. This in turn ended up affecting School Specialty Inc., the company that supplies about 70 percent of the schools in the U.S. with school supplies.
Due to the recession, budget cuts and a confusing new pricing and marketing program, School Specialty ended up filing for Chapter 11 bankruptcy. The plan is for the company to be sold to the highest bidder. During this time, the CEO said the company will continue to operate as normal.
According to the Chapter 11 bankruptcy filing, the company has $494.5 million in assets, but $394.5 million in debt. In 2012, the company continued to earn revenue -- listing $732 million for fiscal 2012 -- but also reported a loss of $134 million during this same year.
When looking at what happened, with budget cuts, many school districts could not financially afford to adopt new curriculum guidelines. Without new guidelines, schools did not need to purchase new materials.
Additionally, these budget cuts also meant delaying construction and renovations on many schools throughout the country. This meant new furniture and equipment was not needed from School Specialty.
Lastly, the former CEO of School Specialty recognized the fact that a new pricing and marketing program set forth by the company was rather confusing. Prices had not increased, but people didn't necessarily understand the new program. This had a direct impact on sales.
Looking to the future, the hope is that the bankruptcy is resolved in 90 days.
Source: Milwaukee Journal Sentinel, "School supply distributor School Specialty files for bankruptcy protection," Rick Barrett, Jan. 28, 2013
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