B&N Just Reported its Umpteenth Year of Declining Revenues

22.06.2017 Nate Hoffelder 4 Comments

Barnes & Noble released their fiscal 2017 earnings report today, and the news was as bad as you would expect.

Revenues decreased 6.3% for the quarter and 6.5% for the fiscal year, to $821 million and $3.9 billion, respectively. That figure includes the $146 million Nook revenues (down 23% from $192 million in the previous fiscal year).

The one bright spot were online sales, which grew 3.7% for the full year and 2.9% for the quarter.

It is not easy to tell from the available data, but it appears B&N hs not had an increase in sales since the fiscal year 2009.

I have the previous six fiscal reports in front of me, and they show that in all those years B&N’s growth came from one of two places: B&N College, which belonged to B&N between 2009 and 2015, and Nook.

B&N’s retail sales continued to decline while Nook revenue grew, and when the Nook imploded in late 2012, B&N never recovered.

Revenues have declined ever since, and yet for some unknown reason B&N has paid out a dividend for each of the last seven quarters. B&N’s poor showing does not justify paying a dividend, which is why my current working theory is that the dividend is being used to buy off major investors and keep them from calling for the liquidation of B&N.

press release:

B&N today reported sales and earnings for its fiscal 2017 fourth quarter and full-year ended April 29, 2017.

Total sales were $821 million for the quarter and $3.9 billion for the full year, decreasing 6.3% and 6.5% over the prior year periods, respectively. Comparable store sales declined 6.3% for both the fourth quarter and full year. Online sales increased 2.9% for the quarter and 3.7% for the full year.

The consolidated fourth quarter net loss improved to $13.4 million, or $0.19 per share, compared to a loss of $30.6 million, or $0.42 per share, in the prior year. For the quarter, Retail generated an operating loss of $15.9 million, while NOOK incurred an operating loss of $7.9 million, for a total operating loss of $23.8 million.

Fiscal 2017 consolidated net earnings from continuing operations were $22.0 million, or $0.30 per share, compared to net earnings from continuing operations of $14.7 million, or $0.05 per share, in the prior year. For the full year, Retail generated operating income of $90.7 million, while NOOK incurred an operating loss of $36.4 million, for a total operating income of $54.3 million.

In addition to exceeding prior year operating results, excluding non-recurring charges in both years, consolidated EBITDA was $187.2 million in fiscal 2017, in-line with guidance of $180 million to $190 million, versus $185.7 million last year.

For the full year, consolidated EBITDA was $172.2 million, as compared to $150.5 million a year ago. NOOK EBITDA losses decreased $47.3 million to $17.3 million, as the Company continued to rationalize NOOK expenses. Retail EBITDA of $189.5 million declined $25.6 million, primarily due to the sales decline.

"While fiscal 2017 proved to be a challenging year for the company, we reduced costs by $137 million, enabling us to sustain our profitability level," said Demos Parneros, Chief Executive Officer of Barnes & Noble, Inc. "In fiscal 2018, we are focusing on ways to improve the business and reignite sales through an aggressive test and learn process and companywide simplification process that will take out costs."

The company ended the fiscal year with $64.9 million of debt under its $750 million credit facility. During fiscal 2017, the Company returned $67 million in cash to its shareholders through dividends and share repurchases.

Outlook

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

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