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Barnes & Noble Reports Fiscal 2018 First Quarter Financial Results

Pub Date:

Barnes & Noble

First Quarter Operating Results Improve on Expense Reductions

 Barnes & Noble, Inc. (NYSE:BKS) today reported sales and earnings for its fiscal 2018 first quarter ended July 29, 2017.

Total sales for the first quarter were $853 million, declining 6.6% as compared to the prior year. Comparable store sales decreased 4.9%, as declines in non-book categories outpaced improved book trends during the quarter. The Company also experienced lower online and NOOK® sales during the quarter, which were impacted by the prior year eBook settlement and lower promotional activity.

The consolidated first quarter net loss improved to $10.8 million, or $0.15 per share, compared to a loss of $14.4 million, or $0.20 per share, in the prior year.

The consolidated first quarter operating loss of $15.2 million improved $6.2 million versus the prior year. Retail incurred an operating loss of $12.5 million, while NOOK incurred an operating loss of $2.7 million.

Consolidated first quarter EBITDA was $11.2 million, as compared to $9.6 million a year ago. NOOK generated EBITDA of $0.6 million, an $8.6 million improvement over the prior year on expense reductions. Retail EBITDA of $10.6 million decreased $7.0 million primarily due to the comparable store sales decline, somewhat mitigated by expense reductions.

“Our first quarter earnings results improved over the prior year, as we were able to mitigate the sales decline through expense reductions,” said Demos Parneros, Chief Executive Officer of Barnes & Noble, Inc. “We expect to improve our performance in the back-half of the year, which coupled with our focus on expense reduction, will enable us to achieve EBITDA of $180 million.”

Outlook

For fiscal year 2018, the Company continues to expect comparable bookstore sales to decline in the low single digits and full year consolidated EBITDA to be approximately $180 million.

Conference Call

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, September 7, 2017, and is accessible at investors.barnesandnobleinc.com.

Barnes & Noble, Inc. will report fiscal 2018 second quarter results on or about November 30, 2017.

About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS) is the nation’s largest retail bookseller, and a leading retailer of content, digital media and educational products. The Company operates 632 Barnes & Noble bookstores in 50 states, and one of the Web’s premier e-commerce sites, BN.com (www.bn.com). The Nook Digital business offers a lineup of popular NOOK® tablets and eReaders and an expansive collection of digital reading and entertainment content through the NOOK Store®. The NOOK Store features more than 4.5 million digital books in the US (www.nook.com), plus periodicals and comics, and offers the ability to enjoy content across a wide array of popular devices through Free NOOK Reading Apps™ available for Android™, iOS® and Windows®.

General information on Barnes & Noble, Inc. can be obtained by visiting the Company’s corporate website at www.barnesandnobleinc.com.

BKS – Financial

             
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
             
        13 weeks ended   13 weeks ended
        July 29, 2017   July 30, 2016
             
Sales       $ 853,316     $ 913,882  
Cost of sales and occupancy         599,835       636,343  
Gross profit         253,481       277,539  
Selling and administrative expenses         242,295       267,891  
Depreciation and amortization         26,398       31,037  
Operating loss         (15,212 )     (21,389 )
Interest expense, net         2,040       1,629  
Loss before taxes         (17,252 )     (23,018 )
Income taxes         (6,474 )     (8,602 )
Net loss       $ (10,778 )   $ (14,416 )
             
Loss per common share:            
Basic       $ (0.15 )   $ (0.20 )
Diluted       $ (0.15 )   $ (0.20 )
             
Weighted average common shares outstanding:            
Basic         72,453       72,903  
Diluted         72,453       72,903  
             
Dividends declared per common share       $ 0.15     $ 0.15  
             
Percentage of sales:            
Sales         100.0 %     100.0 %
Cost of sales and occupancy         70.3 %     69.6 %
Gross profit         29.7 %     30.4 %
Selling and administrative expenses         28.4 %     29.3 %
Depreciation and amortization         3.1 %     3.4 %
Operating loss         -1.8 %     -2.3 %
Interest expense, net         0.2 %     0.2 %
Loss before taxes         -2.0 %     -2.5 %
Income taxes         -0.8 %     -0.9 %
Net loss         -1.3 %     -1.6 %
                     
     
BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
               
               
          13 weeks ended   13 weeks ended
          July 29, 2017   July 30, 2016
               
Sales              
  Retail       $ 830,036     $ 881,713  
  NOOK         29,500       41,048  
  Elimination         (6,220 )     (8,879 )
Total         $ 853,316     $ 913,882  
               
Gross Profit            
  Retail       $ 238,890     $ 258,287  
  NOOK         14,591       19,252  
Total         $ 253,481     $ 277,539  
               
Selling and Administrative Expenses            
  Retail       $ 228,321     $ 240,692  
  NOOK         13,974       27,199  
Total         $ 242,295     $ 267,891  
               
EBITDA            
  Retail       $ 10,569     $ 17,595  
  NOOK         617       (7,947 )
Total         $ 11,186     $ 9,648  
               
Depreciation and Amortization            
  Retail       $ (23,079 )   $ (24,962 )
  NOOK         (3,319 )     (6,075 )
Total         $ (26,398 )   $ (31,037 )
               
Operating Loss            
  Retail       $ (12,510 )   $ (7,367 )
  NOOK         (2,702 )     (14,022 )
Total         $ (15,212 )   $ (21,389 )
               
Net Loss            
  Operating loss       $ (15,212 )   $ (21,389 )
  Interest expense, net         (2,040 )     (1,629 )
  Income taxes         6,474       8,602  
Total         $ (10,778 )   $ (14,416 )
               
               
               
Percentage of sales:            
               
Gross Margin            
  Retail         28.8 %     29.3 %
  NOOK         62.7 %     59.8 %
Total           29.7 %     30.4 %
               
Selling and Administrative Expenses            
  Retail         27.5 %     27.3 %
  NOOK         60.0 %     84.6 %
Total           28.4 %     29.3 %
               
EBITDA            
  Retail         1.3 %     2.0 %
  NOOK         2.7