Barnes & Noble Q1 earnings: 6.6% decline in sales, 24.5% fall in NOOK segment, $14.4M loss
‘Given the softer than expected sales results to date, and the expected continuation of the challenging retail environment, the Company now expects fiscal 2017 comparable store sales to decline in the low single digits.’
When the announcement was released that the board of Barnes & Noble had force Ronald Boire out as CEO of the company you just knew that when it came time to release its first quarter 2017 earnings it would not be good news. It wasn’t.
The largest brick and mortar book retailer continues to struggle. Total sales for the quarter came in at $913.9 million, a decline of 6.6 percent – and the net loss from continuing operations was $14.4 million.
Investors hammered the stock when Wall Street trading opened. The stock had jumped up in value earlier in the week on news that insiders were taking advantage of the company’s low share price to increase their position, but that optimistic way of looking at the retailer faded when today’s earnings report was released.
Normally, a company like B&N would have a lot to say about its earnings in its statement, but with the CEO out, and the numbers continuing to look dire, the company opted for a short statement, Probably a wise choice.
NEW YORK, NY – September 8, 2016 — Barnes & Noble, Inc. today reported sales and earnings for its fiscal 2017 first quarter ended July 30, 2016.
Total sales for the first quarter were $913.9 million, declining 6.6% as compared to the prior year. Retail sales, which include Barnes & Noble stores and BN.com, declined 6.1% to $881.7 million for the quarter. Comparable store sales declined 6.0% for the quarter, softer than the Company’s expectations, due in large part to lower traffic and the challenging retail environment. NOOK sales, which include digital content, devices and accessories, declined 24.5% to $41.0 million for the quarter.
Retail incurred an operating loss of $7.4 million during the quarter, which includes severance charges and consulting fees of $7.9 million resulting from Retail’s cost reduction initiatives. NOOK incurred an operating loss of $14.0 million, which includes severance and transitional costs of $7.2 million related to the previously announced outsourcing of certain NOOK services and the closure of its California and Taiwan offices.
The consolidated first quarter net loss from continuing operations was $14.4 million, or $0.20 per share, as compared to a loss from continuing operations of $7.8 million, or $0.27 per share, in the prior year. Excluding the charges noted above, the consolidated first quarter net loss from continuing operations would have been $5.0 million, or $0.07 per share.
Retail generated EBITDA of $17.6 million, inclusive of the Retail charges noted above. Excluding the charges, Retail EBITDA would have been $25.5 million, a decline of $19.8 million versus the prior year, primarily as a result of the sales decrease.
NOOK EBITDA losses were $7.9 million, which includes the NOOK charges noted above. Excluding the charges, NOOK EBITDA losses would have been $0.7 million, improving $16.6 million as compared to a year ago, due primarily to the Company’s cost rationalization efforts.
On a consolidated basis, the Company generated first quarter EBITDA of $9.6 million. Excluding the charges noted above, consolidated EBITDA would have been $24.7 million, or $3.2 million lower than the prior year.
Return of Capital
During the quarter, the Company returned $20.8 million in cash to its shareholders, including $11.1 million in dividends and $9.7 million through share repurchases. The Company acquired approximately 830,000 shares at an average price of $11.73 during the quarter under its share repurchase program.
The Company remains focused on executing its previously announced strategic initiatives to increase sales and reduce expenses. Given the softer than expected sales results to date, and the expected continuation of the challenging retail environment, the Company now expects fiscal 2017 comparable store sales to decline in the low single digits.
Although the Company is reducing its comparable store sales expectations, through its expense reduction initiatives, it continues to expect full year consolidated EBITDA to be in a range of $200 million to $250 million. Retail EBITDA is expected to be in a range of $240 million to $280 million, excluding the impact of any charges related to its cost reduction initiatives and costs associated with the recent CEO departure. NOOK EBITDA losses are expected to decline to a range of $30 million to $40 million, including previously announced transitional costs.