- Pearson sells Italian and German courseware businesses
- Decline in US student enrolment data is a headwind
- Importance of online learning is increasing
Shares in Pearson (PSON) drifted lower despite the group announcing that it had sold its Italian and German courseware business to Sanoma Corporation for £163 million in cash.
The disposals are part of a broader strategic review of the group’s local courseware publishing businesses.
Investors have focused instead on the recently published US student enrolment data which presents a decidedly disconcerting picture for companies like Pearson which are exposed to the US higher education sector.
STUDENT SLOWDOWN
Total US student enrolments fell for the fifth semester in a row, down 4.1% year-on-year, with a 4.7% fall off in undergraduates year on year and a 1.4 million decline in the number of undergraduates compared to pre-pandemic.
Community Colleges enrolments are the worst impacted, down 7.8% year-on-year. Structurally, the trends may be turning against US higher education enrolment.
As the director of the report said of the findings: ‘It suggests that there is a broader questioning of the value of college and particularly concerns about student debt and paying for college and the potential labor market returns.’
The enrolment data comes as a growing number of students and their families begin considering alternatives to higher education - both as a result of tuition expenses and a growing body of data highlighting earnings potential through alternative avenues.
If enrolments are on a permanently downward trend, or (at best) stagnating, then the question becomes, how do you increase your revenues in a market where both numbers are falling and students are more price-conscious?
One strategic option for Pearson is to leverage its online learning offering.
INCREASING IMPORTANCE OF ONLINE LEARNING
Many workers have started to re-assess their priorities in an increasingly tight labour market. Online learning has become increasingly important for corporates in order to remain competitive and retain staff.
To strengthen its position within this area, Pearson recently acquired the 80% stake in Credly that it did not already own. Credly is described as the market leader in digital credentials and certifications for the workforce.
The deal adds depth to Pearson’s offering in the fast-growing workforce skills sector and expands its digital footprint and will accelerate its growth prospects.
