Back in the beginning of January Barnes & Noble revealed that its holiday revenues – the period where a lot of retailers end up in the black for the year – were down 6.4%.
Today they made it clear that the news for the quarter is almost as bad. Revenues for the third quarter fell 5.3%, to $1.2 billion, and comparable store sales decreased 5.8% for the quarter.
Fortunately, B&N has a plan.
They’re doubling down on the Nook Store, and taking it international – no, wait, that was the plan in 2012.
They’re putting Espresso Book machines in stores – no, wait, that was the plan in 2014.
They’re going to spin off the Nook division – no, wait, that was the plan in 2014.
They’re going to pivot to selling tchotchkes – no, wait, that was the plan in 2015.
They’re going to open restaurant/bookstores – no, that was the plan in 2016.
No, apparently B&N’s new plan is to spew buzzwords and hope you don’t notice that they don’t really have any clue how to turn things around:
- strengthening the core business by enhancing the customer value proposition;
- 2) improving profitability through an aggressive expense management program, which will be used to fund growth initiatives;
- 3) accelerating execution through simplification; and
- 4) innovating for the future, which will position the company for long-term growth.
Yeah, that’s not a plan; that’s just more buzzwords like the six paragraphs of nonsense that B&N CEO Parneros gave us back in September.
B&N really has no better idea how to get out of this mess than they did last fall, only now B&N is going to have to make the attempt minus the key experienced employees it fired a few weeks back.
Do you know how you turn around a retail business? You sell more stuff.
The problem for B&N is that they’ve already fired the employees that were most capable of turning around the company, including the receiving managers.
That’s why my over/under for B&N filing for bankruptcy is next January/February.
Barnes & Noble today reported sales and earnings for its fiscal 2018 third quarter ended January 27, 2018. Additionally, the Company outlined elements of its strategic turnaround plan.
Total sales for the third quarter were $1.2 billion, declining 5.3% as compared to the prior year. Comparable store sales decreased 5.8% for the quarter, primarily due to lower traffic. Comparable store sales trends did improve in January, declining 3.5%.
“While we were disappointed with our holiday sales, comparable store sales trends did improve in January,” said Demos Parneros, Chief Executive Officer of Barnes & Noble, Inc. “We have initiated a strategic turnaround plan that is centered on growing the business and enhancing shareholder value. In the short term we are focused on stabilizing sales, improving productivity and reducing expenses. Achievement of our longer-term goals requires a significant multi-year transformation. We expect our plan to provide consistent improvement beginning in fiscal 2019 and beyond.”
Barnes & Noble announced that its long-term strategic plan is focused on the following four key elements: 1) strengthening the core business by enhancing the customer value proposition; 2) improving profitability through an aggressive expense management program, which will be used to fund growth initiatives; 3) accelerating execution through simplification; and 4) innovating for the future, which will position the company for long-term growth.
Beginning in February, Barnes & Noble implemented a companywide expense reduction plan. This plan includes a new store labor model that provides greater flexibility and better customer service by eliminating tasks and allowing booksellers to focus more on customers. The Company estimates that these actions will result in annual cost savings of approximately $40 million.
The consolidated third quarter net loss was $63.5 million, or $0.87 per share, as compared to prior year net earnings of $70.3 million, or $0.96 per share.
Third quarter results include a non-cash goodwill impairment charge of $133.6 million, and a severance charge of $10.7 million associated with the Company’s transition to a new labor model.
Excluding non-recurring charges, third quarter EBITDA would have been $137.7 million.
Third quarter taxes include a $35.0 million non-cash valuation allowance against certain deferred tax assets, partially offset by a benefit of $26.4 million due to the enactment of the Tax Cuts and Jobs Act tax legislation.
The Company ended the third quarter with $60 million of borrowings under its $750 million credit facility.
image by MikeKalasnik