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School Specialty, Inc. (SCHS)

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The economic downturn has resulted in an uncertainty in the school districts related to state budget funding levels, which has led to a cautious spending approach. Consequently, School Specialty (SCHS) has been registering a sustained decline in the topline.

A continued softness in demand can be seen in both curriculum-based products and supplemental materials. The furniture market has been the worst hit by budget cuts, as school construction and modernization projects have been cancelled or postponed.

Further, the intense competition and seasonality of business undermine the company's future growth prospects. As such, we have an Underperform recommendation on the stock.

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