Barnes & Noble sales hit by election jitters
Barnes & Noble's same-store sales fell 3.2% in its fiscal second quarter, with CEO Len Riggio blaming the decline on an election-induced store traffic slowdown.
Barnes & Noble's Q2 loss narrowed from the year-ago quarter, falling to $20.4 million, or 29 cents per share, from $39.2 million, or 52 cents per share in Q2 2016. Overall sales fell 4% to $858.5 million, missing analyst estimates for a loss of 34 cents per share on revenue of $859.1 million; results were mitigated by healthy sales of J.K. Rowling’s “Harry Potter and the Cursed Child,” the eighth installment in the blockbuster series.
The bookseller also announced that former Staples North America president Demos Parneros has been named chief operating officer, reporting to Riggio. Demos, who had been at Staples for 30 years, replaces Jaime Carey, who as of June serves as president of development and the retailer’s new restaurant unit.
Barnes & Noble is still in search of a strategy that works in the face of fierce competition from Amazon (which began as a bookseller itself two decades ago) and surprisingly healthy sales from independent brick-and-mortar retailers.
Surprising investors, Barnes & Noble last year spun off its lucrative education unit, which itself is also facing increased competition from Amazon as the e-commerce giant builds its college presence nationwide. Many observers had expected the company to spin off its Nook e-book reader business instead: The Nook never really took off, and that unit continues to struggle, with Nook sales (which include digital content, devices and accessories) declining 19.4% to $35 million in fiscal Q2.
The fiercely contested U.S. election cycle, which caused some consumer anxiety and has cost retailers an estimated $800 million in e-commerce sales alone, also didn’t help much in the quarter, Riggio said in a statement.
“While we are pleased to have improved our performance due to expense reductions, we did experience sluggish sales, which we believe are directly related to the election cycle,” he said. "With the election behind us, we hope and expect sales will improve over the holidays.”
There is some cause for optimism. Same-store sales began to rise in January after Barnes & Noble beefed up its non-book offerings under CEO Ronald Boire, who nevertheless was let go in August. Executive Chairman Riggio and other executives have assumed Boire's responsibilities until a new CEO is selected, and despite Boire's departure, Barnes & Noble says it remains focused on executing previously announced strategic initiatives to increase sales and reduce expenses.
Barnes & Noble expects fiscal 2017 same-store sales to decline in the low single digits and full-year consolidated earnings before interest, taxes, depreciation and amortization 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 cost reduction initiatives and costs associated with Boire's exit. Nook EBITDA losses are expected to decline to a range of $30 million to $40 million.
- press release via BusinessWire Barnes & Noble Reports Fiscal 2017 Second Quarter Financial Results
- press release Barnes & Noble Appoints Demos Parneros as Chief Operating Officer
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