Post Earnings Coverage as Barnes & Noble’s Q1 Results Impacted by Lower Traffic and Challenging Retail Environment

LONDON, UK / ACCESSWIRE / September 14, 2016 / Active Wall St. announces its post-earnings coverage on Barnes & Noble, Inc. (NYSE: BKS). The company released its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 08, 2016. The New York City-based company’s Q1 FY17 revenues fell 6.6% on y-o-y basis, disappointing the Wall Street. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on BKS. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=BKS.

Earnings Reviewed

For the quarter ended on July 30, 2016, Barnes & Noble’s reported total sales of $913.88 million compared to total sales of $978.56 million recorded at the end of Q1 FY16. Total sales numbers underperformed market estimate of $958.68 million. The company’s comparable store sales declined 6.0% y-o-y in Q1 FY17, which was lower than the company’s expectations and was primarily due to lower traffic and challenging retail environment.

The bookseller reported consolidated Q1 FY17 net loss from continuing operations of $14.42 million, or $0.20 loss per share, compared to a net loss from continuing operations of $7.75 million, or $0.27 loss per share, in the prior-year comparable quarter. Excluding the one-time charges, the company’s consolidated net loss from continuing operations came in at $5.0 million, or $0.07 loss per share, narrower than the market net loss expectation of $0.13 loss per share.

During the reported quarter, Barnes & Noble generated EBITDA of $10 million. The company’s EBITDA, excluding one-time charges came in at $25 million in Q1 FY17 compared to $28 million in the prior year’s quarter.

Segment-wise

Barnes & Noble’s Retail Segment sales for Q1 FY17 declined by $57 million, or 6.1%, y-o-y to $881.71 million from $939.00 million reported in Q1 FY16. The segment generated gross profit of $258.29 million compared to gross profit of $281.78 million in Q1 FY16. Additionally, the comparable sales for the segment were down 6% y-o-y basis during the quarter, primarily due to lower store traffic. The company’s Retail segment recorded an operating loss of $7.37 million during Q1 FY17 compared to an operating income of $20.52 million during Q1 FY16.

In Q1 FY17, NOOK segment reported same-store sales decline of 5.2%, which was softer than company’s expectations. The segment’s sales declined $13 million, or 25%, in Q1 FY17 to $41.05 million from $54.35 million in Q1 FY16. NOOK segment recorded gross profit of $19.25 million, which was above $18.31 reported in Q1 FY16. Additionally, the segment incurred operating loss of $14.02 million in Q1 FY17 compared to an operating loss of $26.21 million in Q1 FY16.

Retail margins declined 70 basis points during the reported period due to greater expense to leverage and higher online promotions.

Balance Sheet

As on July 31, 2016, Barnes & Noble’s had cash and cash equivalents of $14.28 million compared to $21.18 million as on August 01, 2015. Furthermore, the company had reported long-term debt, amounting to $64.60 million as on July 31, 2016.

Share Repurchase and dividends

During the reported period, the company repurchased 830,000 shares at an average price of $11.73 per share as per its share repurchase program. Furthermore, Barnes & Noble informed Wall Street that in the last one year it has returned $82 million in cash to its shareholders in form of dividends and share repurchases.

Outlook

Barnes & Noble’s expects comparable sales to remain soft throughout the year and forecasts that it would decline in the low single-digit in FY17. Despite negative sales growth expectation, the company anticipates consolidated EBITDA to be in a range of $200 million to $250 million. The company forecasts Retail EBITDA, excluding and one-time expense, for FY17 to be in a range of $240 million to $280 million. Furthermore, Barnes & Noble’s expects NOOK segment’s EBITDA losses to decline to a range of $30 million to $40 million.

Stock Performance

Barnes & Noble’s share price finished yesterday’s trading session at $11.57, sliding 2.53%. A total volume of 1.02 million shares exchanged hands. The stock has advanced 3.71% in the last three months. Furthermore, since the start of the year, shares of the company has rallied 38.55%. The stock has a dividend yield of 5.19%.

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