Barnes & Noble revenue falls 10% in full year fiscal earnings report, but losses at NOOK trimmed
Current company CEO Michael Huseby will become the Executive Chairman of Barnes & Noble Education following the spin-off
The bookseller Barnes & Noble today reported earnings for its full year fiscal 2015. On the revenue side, things continue to look frightening, with revenue down across the board. But thanks to cost reductions, the company actually reported a profit for the year.
The NOOK division continues to see revenues fall, down just a bit less than 40 percent in the quarter. But the company touted its cost savings, saying losses were only $15 million, quite an improvement over the $41 million the division lost in the same quarter of the previous year.
The company also announced that current CEO Michael Huseby has chosen where to go after B&N completes its spin-off: Huseby will become the Executive Chairman of Barnes & Noble Education.
NEW YORK, NY – June 25, 2015 — Barnes & Noble, Inc. today reported sales and earnings for its fiscal 2015 fourth quarter and full-year ended May 2, 2015.
The fourth quarter and full-year ended May 2, 2015, consisted of 13 weeks and 52 weeks, respectively, as compared to 14 weeks and 53 weeks in the prior year. Comparable sales data in this release exclude the impact of the additional week in fiscal 2014 and are on a comparable week basis.
Fourth quarter consolidated revenues decreased 10.4% to $1.2 billion versus the prior year. Consolidated fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) improved to $33 million, as compared to $11 million in the prior year. For fiscal 2015, consolidated revenues decreased 4.9% to $6.1 billion versus the prior year. Fiscal 2015 consolidated EBITDA increased 30.4% to $327 million, as compared to $251 million a year ago.
The consolidated fourth quarter net loss was $19.4 million, or $0.37 per share, as compared to the prior year net loss of $36.7 million, or $0.72 per share. Fiscal 2015 consolidated net earnings were $36.6 million, or $0.21 per share, as compared to a net loss of $47.3 million, or $1.12 per share, in the prior year.
“The Company is successfully implementing strategic and operating initiatives resulting in the improved performance of each of our business units as evidenced by our 30% year-over-year consolidated EBITDA increase. We ended 2015 with an improved balance sheet, and also well positioned to move forward with a focus on operations and our customers,” said Michael P. Huseby, Chief Executive Officer of Barnes & Noble. “Our fiscal 2015 core comparable bookstore sales increased 0.5% benefiting from merchandising initiatives, coupled with an improving physical book business. NOOK significantly reduced its losses as a result of our cost rationalization efforts. College continued to grow its new business, improve its comparable store sales trends and develop its digital education platform, Yuzu™. By acquiring the external partnership interests in NOOK Media, we gained the operational and structural flexibility we now have. We expect to separate the Barnes & Noble, Inc. and Barnes & Noble Education businesses by the end of August, allowing each business to independently focus on their growth initiatives.”
Fourth Quarter 2015 Results from Operations
Segment results for the 13 weeks of fiscal 2015 and 14 weeks of fiscal 2014 fourth quarters are as follows:
Fiscal 2015 Results from Operations
Segment results for the 52 weeks of fiscal year 2015 and 53 weeks of fiscal year 2014 are as follows:
The Retail segment, which includes Barnes & Noble Bookstores and BN.com, had revenues of $869 million for the quarter and $4.1 billion for the full year, decreasing 9.0% and 4.4%, respectively. The inclusion of the 53rd week contributed $57 million in additional sales in fiscal 2014, representing a majority of the sales decline for the quarter. Comparable store sales declined 1.3% during the quarter and 1.9% for the full year. “Core” comparable store sales, which exclude sales of NOOK products, decreased 0.5% for the fourth quarter, while increasing 0.5% for the full year. Sales for both the quarter and the year were also impacted by store closures and lower online sales.
Retail generated EBITDA of $32 million for the quarter, decreasing 39.0%, primarily as a result of the additional week of sales last year. Full year EBITDA of $322 million decreased 8.9% primarily as a result of the sales decline.
The College segment had revenues of $274 million for the quarter, decreasing 8.1% as compared to a year ago. The inclusion of the 53rd week contributed $15 million in additional sales in fiscal 2014. Fourth quarter sales were also negatively impacted by timing of the fiscal calendar, as the prior year included an additional week of rush sales. Comparable store sales increased 6.0% for the quarter on higher general merchandise and textbook sales.
For the fiscal year, despite the comparison to a 53-week year, College sales increased 1.4% to $1.8 billion, led by new store growth. Full year comparable store sales increased 0.1%, as higher general merchandise sales were offset by increased adoption of lower priced textbook rentals.
Fourth quarter College EBITDA slightly increased to $15 million. Full year College EBITDA decreased 20.5% to $91 million, primarily due to continued investments to support new business growth and the Yuzu digital education platform, as well as the comparison to an $8 million favorable LIFO adjustment in the prior year. College’s fiscal 2015 EBITDA includes $26 million of expenses for Yuzu, as compared to $22 million in the prior year.
The NOOK segment (including digital content, devices and accessories) had revenues of $52 million for the quarter and $264 million for the full year, decreasing 39.8% for the quarter and 47.8% for the year.
Device and accessories sales were $13 million for the quarter and $86 million for the full year, declining 48.2% and 66.7%, respectively, due to lower unit selling volume. Digital content sales were $40 million for the quarter and $177 million for the full year, declining 36.5% and 27.8%, respectively, due primarily to lower device unit sales.
Fourth quarter NOOK EBITDA losses of $15 million declined $41 million, primarily on comparisons to prior year asset impairment charges of $28 million. Full year EBITDA losses of $86 million declined $131 million, or 60.4%, versus the prior year on cost rationalization efforts, prior year impairment charges, previously disclosed current year benefits and improved device margins.
For fiscal year 2016, the Company expects Retail core comparable bookstore sales, which exclude sales of NOOK products, to increase approximately 1%, while College comparable store sales are also expected to increase approximately 1%. The Company also expects full fiscal year EBITDA losses in the NOOK segment to decline versus the prior year.
The Company said it plans to name Michael Huseby, the Company’s current Chief Executive Officer, Executive Chairman of Barnes & Noble Education when the proposed spin-off of Barnes & Noble Education becomes effective.