Net Income Falls at Excelligence

Lower sales in its elementary business and tighter margins in its early childhood division caused Monterey, CA-based Excelligence Learning Corp. (Nasdaq: LRNS) to report modest revenue growth for the quarter but lower earnings.

For the three months ended Sept. 30, sales were $53.4 million, up 4% from $51.0 million for the comparable quarter of 2003. Net income fell 47%, to $4.1 million from $7.8 million a year ago.

Breaking it down by segment, sales for the early childhood division grew 14%. The division consists of b-to-b catalogs Discount School Supply and Early Childhood Manufacturers’ Direct, and consumer Website SmarterKids.com. But higher selling and administrative costs contributed to a 64% decline in the division’s net income, to $1.7 million.

Sales within the elementary school business, which sells fundraising kits to schools, fell 7%.

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