Dive Brief:
- Pearson, the London-based education publishing powerhouse, has announced a restructuring plan that would cut employees and create savings to shore up profits as business stabilizes.
- The Wall Street Journal reports the $450 million plan includes cutting 4,000 employees (about 10% of its workforce), merging businesses, and focusing on a streamlined number of big opportunities — moves that come in part because of falling higher education enrollments in the United States due to increased regulation.
- Pearson plans to complete its restructuring by the end of the year and expects to report adjusted operating profit for 2015 of $1.03 billion, which could rise to $1.15 billion in 2018 if business in the United States and the United Kingdom recovers as expected.
Dive Insight:
The market responded favorably to Pearson’s announcement, indicating continued support for the education publisher, which has seen business dive from its peak and recover more slowly than expected.
Regulation of the for-profit higher education sector in the United States has caused massive enrollment and revenue declines across the industry. Apollo Education Group has continued to report lower-than-expected earnings as it right-sizes following rapid growth through the recession. The company is in sales talks now. Corinthian Colleges Inc., of course, was forced into closure by Department of Education policy, and EDMC and Career Education also announced campus closures this year. With Republican control of Higher Education Act discussions, regulation may soften on this sector in coming years.
