B&N's 2nd Quarter: Sales Slip, Earnings Below Expectations
In the second quarter ended November 1, revenues at Barnes & Noble fell 2.7%, to $1.7 billion, and net income was $12.3 million, down slightly from $13.2 million in the same period last year. Earnings per share was 12 cents instead of the expected 31 cents, which is not good news on Wall Street.
The company announced that it and Microsoft have ended their partnership, so Microsoft will no longer supply funding to B&N. B&N is acquiring Microsoft's preferred interest in Nook Media and said the change gives it "operational and strategic flexibility." As a result, B&N said the company's long-awaited split into Nook Media/College and B&N retail entities "could occur by the end of August 2015."
Sales at B&N's retail segment fell 3.6%, to $888 million, primarily because of lower sales of Nook products as well as store closures. Sales at stores open at least a year fell 1.5%, but when Nook products are excluded, sales were up 0.5%.
College revenues rose 1.9%, and sales at college stores open at least a year rose 0.4%.
Nook sales fell 41.3%, to $64 million, with device and accessories sales down 63.7%, to $18.7 million. Digital content sales fell 21.2%, to $45.2 million, mainly because of lower device sales.
For fiscal year 2015, the company predicted that comp-store bookstore, "retail core" and college sales will decline in the low single digits.
B&N CEO Michael Huseby commented: "Retail and College improved their sales trends during the second quarter and Nook continued its rationalization efforts, while recently launching several initiatives to increase NOOK users and content sales. Retail sales continued to benefit from improving physical book industry trends coupled with our own merchandising initiatives, while our College bookstores comparable sales improved on favorable textbook sales trends and higher merchandise sales. Separately, today's announcement on the restructuring of the Nook Media agreements will enable the Company to further rationalize the Nook business and provide a clearer path for the potential separation of our Retail and Nook Media businesses."