Educational Development Corporation Reports 29% Revenue Decline in Q1 FY 2026

Educational Development Corporation (EDC) reported a decline in financial performance for the first quarter of fiscal year 2026, ending May 31, 2025. The company generated net revenues of $7.1 million, a decrease of 29% from $10.0 million in the same period last year. The net loss for the quarter was $1.1 million, compared to a loss of $1.3 million in the prior year. The decrease in revenue was attributed to a significant drop in sales from the PaperPie division, which saw revenues fall by 31.5% to $6.1 million, primarily due to a reduction in the average number of active Brand Partners.

In terms of operational metrics, the average number of active Brand Partners decreased to 7,700 from 13,400 year-over-year, reflecting challenges in recruiting new partners amid economic pressures such as inflation. The company’s gross margin also suffered, declining to 58.2% from 64.6% in the previous year, driven by increased discounts and shipping promotions aimed at boosting sales. Total operating expenses decreased by 30% to $5.7 million, largely due to reduced sales commissions and general administrative costs.

EDC is actively pursuing strategic initiatives to improve its financial position, including the planned sale of its Hilti Complex property, which is expected to generate approximately $35.2 million. The proceeds from this sale are intended to pay off existing term loans and revolving credit, which totaled $26.4 million as of May 31, 2025. The company has also been working to reduce inventory levels, which could generate additional cash flow. As of the end of the quarter, EDC reported total assets of $76.3 million, down from $78.3 million at the end of the previous fiscal year.

The company’s liquidity remains a concern, with a revolving line of credit balance of $4.2 million and limited available capacity. EDC's management has indicated that they are focused on stabilizing operations and improving cash flow through inventory reduction and enhancing Brand Partner recruitment. However, they acknowledged that ongoing economic challenges could continue to impact performance. The company has not provided specific guidance for future quarters but remains committed to executing its strategic plans to alleviate financial pressures and improve overall performance.