Company Exceeds Prior Year Operating Profit on
Cost Reductions
Barnes & Noble, Inc. (NYSE:BKS) 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.
Conference Call
A conference call with Barnes & Noble, Inc.’s senior
management will be webcast beginning at 10:00 A.M. ET on Thursday,
June 22, 2017, and is accessible at
investors.barnesandnobleinc.com.
Barnes & Noble, Inc. will report fiscal 2018 first quarter
results on or about September 7, 2017.
About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE:BKS) is the nation’s largest
retail bookseller, and a leading retailer of content, digital media
and educational products. The Company operates 633 Barnes &
Noble bookstores in 50 states, and one of the Web’s premier
e-commerce sites, BN.com (www.bn.com). The Nook Digital business
offers a lineup of popular NOOK® tablets and eReaders and an
expansive collection of digital reading and entertainment content
through the NOOK Store®. The NOOK Store features more than 4.5
million digital books in the US (www.nook.com), plus periodicals
and comics, and offers the ability to enjoy content across a wide
array of popular devices through Free NOOK Reading Apps™ available
for Android™, iOS® and Windows®.
General information on Barnes & Noble, Inc. can be obtained
by visiting the Company's corporate website at
www.barnesandnobleinc.com.
BKS – Financial
Forward-Looking Statements
This press release contains certain forward-looking statements
(within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended) and information relating to Barnes & Noble that are
based on the beliefs of the management of Barnes & Noble as
well as assumptions made by and information currently available to
the management of Barnes & Noble. When used in this
communication, the words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and
similar expressions, as they relate to Barnes & Noble or the
management of Barnes & Noble, identify forward-looking
statements.
Such statements reflect the current views of Barnes & Noble
with respect to future events, the outcome of which is subject to
certain risks, including, among others, the general economic
environment and consumer spending patterns, decreased consumer
demand for Barnes & Noble’s products, low growth or declining
sales and net income due to various factors, including store
closings, higher-than-anticipated or increasing costs, including
with respect to store closings, relocation, occupancy (including in
connection with lease renewals) and labor costs, the effects of
competition, the risk of insufficient access to financing to
implement future business initiatives, risks associated with data
privacy and information security, risks associated with Barnes
& Noble’s supply chain, including possible delays and
disruptions and increases in shipping rates, various risks
associated with the digital business, including the possible loss
of customers, declines in digital content sales, risks and costs
associated with ongoing efforts to rationalize the digital business
and the digital business not being able to perform its obligations
under the Samsung commercial agreement and the consequences
thereof, the risk that financial and operational forecasts and
projections are not achieved, the performance of Barnes &
Noble’s initiatives including but not limited to new store concepts
and e-commerce initiatives, unanticipated adverse litigation
results or effects, potential infringement of Barnes & Noble’s
intellectual property by third parties or by Barnes & Noble of
the intellectual property of third parties, and other factors,
including those factors discussed in detail in Item 1A, “Risk
Factors,” in Barnes & Noble’s Annual Report on Form 10-K for
the fiscal year ended April 29, 2017, and in Barnes & Noble’s
other filings made hereafter from time to time with the SEC.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described as anticipated,
believed, estimated, expected, intended or planned. Subsequent
written and oral forward-looking statements attributable to Barnes
& Noble or persons acting on its behalf are expressly qualified
in their entirety by the cautionary statements in this paragraph.
Barnes & Noble undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise after the date of this
communication.
BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated
Statements of Operations (In thousands, except per share
data) (Unaudited) 13 weeks ended
13 weeks ended 52 weeks ended
52 weeks ended April 29, 2017 April 30,
2016 April 29, 2017 April 30, 2016
Sales $ 821,220 $ 876,684 $ 3,894,558 $ 4,163,844 Cost of sales and
occupancy 578,733 610,926
2,682,356 2,836,547 Gross profit
242,487 265,758 1,212,202
1,327,297 Selling and administrative expenses 238,508
291,715 1,040,007 1,176,778 Depreciation and amortization
27,804 31,999 117,887
135,863 Operating income (loss) (23,825 ) (57,956 ) 54,308
14,656 Interest expense, net 1,843 1,537
7,509 8,770 Income (loss) before
taxes (25,668 ) (59,493 ) 46,799 5,886 Income taxes (12,240
) (28,885 ) 24,776 (8,814 ) Net income
(loss) from continuing operations (13,428 ) (30,608 ) 22,023 14,700
Loss from discontinued operations - -
- (39,146 ) Net income (loss) $ (13,428 ) $
(30,608 ) $ 22,023 $ (24,446 )
Basic income (loss)
per common share: Income (loss) from continuing operations $
(0.19 ) $ (0.42 ) $ 0.30 $ 0.05 Loss from discontinued operations
- - - (0.54 )
Basic income (loss) per common share $ (0.19 ) $ (0.42 ) $ 0.30
$ (0.49 )
Diluted income (loss) per common
share: Income (loss) from continuing operations $ (0.19 ) $
(0.42 ) $ 0.30 $ 0.05 Loss from discontinued operations -
- - (0.54 ) Diluted
income (loss) per common share $ (0.19 ) $ (0.42 ) $ 0.30 $
(0.49 ) Weighted average common shares outstanding: Basic
72,054 73,680 72,188 72,410 Diluted 72,054 73,680 72,328 72,542
Dividends declared per common share $ 0.15 $ 0.15 $ 0.60 $
0.60 Percentage of sales: Sales 100.0 % 100.0 % 100.0 %
100.0 % Cost of sales and occupancy 70.5 % 69.7 %
68.9 % 68.1 % Gross profit 29.5 % 30.3
% 31.1 % 31.9 % Selling and administrative expenses
29.0 % 33.3 % 26.7 % 28.3 % Depreciation and amortization
3.4 % 3.7 % 3.0 % 3.3 % Operating income
(loss) -2.9 % -6.6 % 1.4 % 0.4 % Interest expense, net 0.2 %
0.2 % 0.2 % 0.2 % Income (loss) before taxes
-3.1 % -6.8 % 1.2 % 0.1 % Income taxes -1.5 % -3.3 %
0.6 % -0.2 % Net income (loss) from continuing
operations -1.6 % -3.5 % 0.6 % 0.4 % Loss from discontinued
operations 0.0 % 0.0 % 0.0 % -0.9 % Net
income (loss) -1.6 % -3.5 % 0.6 % -0.6 %
BARNES &
NOBLE, INC. AND SUBSIDIARIES Segment Information (In
thousands) (Unaudited) 13 weeks
ended 13 weeks ended 52 weeks ended
52 weeks ended April 29, 2017 April
30, 2016 April 29, 2017 April 30, 2016
Sales Retail $ 796,184 $ 850,024 $ 3,784,655 $
4,028,614 NOOK 31,990 41,952 146,514 191,520 Elimination
(6,954 ) (15,292 ) (36,611 ) (56,290 ) Total $
821,220 $ 876,684 $ 3,894,558 $ 4,163,844
Gross Profit Retail $ 229,069 $ 248,807 $
1,148,542 $ 1,258,405 NOOK 13,418 16,951
63,660 68,892 Total $ 242,487
$ 265,758 $ 1,212,202 $ 1,327,297
Selling and Administrative Expenses Retail $ 220,826
$ 259,868 $ 959,002 $ 1,043,221 NOOK 17,682
31,847 81,005 133,557 Total $
238,508 $ 291,715 $ 1,040,007 $ 1,176,778
EBITDA Retail $ 8,243 $ (11,061 ) $ 189,540 $
215,184 NOOK (4,264 ) (14,896 ) (17,345 )
(64,665 ) Total $ 3,979 $ (25,957 ) $ 172,195
$ 150,519
Depreciation and Amortization Retail
$ (24,121 ) $ (23,809 ) $ (98,877 ) $ (101,888 ) NOOK (3,683
) (8,190 ) (19,010 ) (33,975 ) Total $ (27,804
) $ (31,999 ) $ (117,887 ) $ (135,863 )
Operating Income
(Loss) Retail $ (15,878 ) $ (34,870 ) $ 90,663 $ 113,296 NOOK
(7,947 ) (23,086 ) (36,355 ) (98,640 )
Total $ (23,825 ) $ (57,956 ) $ 54,308 $ 14,656
Net Income (Loss) Operating income (loss) $ (23,825 )
$ (57,956 ) $ 54,308 $ 14,656 Interest expense, net (1,843 ) (1,537
) (7,509 ) (8,770 ) Income taxes 12,240 28,885 (24,776 ) 8,814 Loss
from discontinued operations - -
- (39,146 ) Total $ (13,428 ) $ (30,608 ) $ 22,023
$ (24,446 ) Percentage of sales: Gross
Margin Retail 28.8 % 29.3 % 30.3 % 31.2 % NOOK 53.6 %
63.6 % 57.9 % 50.9 % Total 29.5 % 30.3 % 31.1 % 31.9
% Selling and Administrative Expenses Retail 27.7 % 30.6 %
25.3 % 25.9 % NOOK 70.6 % 119.5 % 73.7 %
98.8 % Total 29.0 % 33.3 % 26.7 % 28.3 % EBITDA
Retail 1.0 % -1.3 % 5.0 % 5.3 % NOOK -17.0 % -55.9 %
-15.8 % -47.8 % Total 0.5 % -3.0 % 4.4 % 3.6 %
Depreciation and Amortization Retail -3.0 % -2.8 % -2.6 % -2.5 %
NOOK -14.7 % -30.7 % -17.3 % -25.1 %
Total -3.4 % -3.7 % -3.0 % -3.3 % Operating Income (Loss)
Retail -2.0 % -4.1 % 2.4 % 2.8 % NOOK -31.7 % -86.6 %
-33.1 % -72.9 % Total -2.9 % -6.6 % 1.4 % 0.4 %
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (In thousands)
(Unaudited) April 29, 2017
April 30, 2016 ASSETS Current assets: Cash and
cash equivalents $ 11,993 $ 13,838 Receivables, net 67,294 124,917
Merchandise inventories, net 946,909 933,723 Prepaid expenses and
other current assets 101,816 105,912
Total current assets 1,128,012 1,178,390
Property and equipment: Land and land improvements
2,541 2,541 Buildings and leasehold improvements 1,072,007
1,058,452 Fixtures and equipment 1,608,433
1,560,005 2,682,981 2,620,998 Less accumulated depreciation
and amortization 2,406,859 2,322,418
Net property and equipment 276,122 298,580
Goodwill 207,381 211,276 Intangible assets, net
310,205 310,904 Other non-current assets 11,201
13,632 Total assets $ 1,932,921 $ 2,012,782
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $ 473,686 $ 480,574 Accrued
liabilities 283,157 360,194 Gift card liabilities 351,424
353,103 Total current liabilities
1,108,267 1,193,871 Long-term debt
64,900 47,200 Deferred taxes 86,132 54,017 Other long-term
liabilities 99,311 114,184 Shareholders' equity: Common
stock; $0.001 par value; 300,000 shares authorized; 111,933 and
111,228 shares issued, respectively 112 112 Additional paid-in
capital 1,741,380 1,738,034 Accumulated other comprehensive income
315 151 Retained earnings (46,425 ) (24,349 ) Treasury stock, at
cost, 39,497 and 37,941 shares, respectively (1,121,071 )
(1,110,438 ) Total Barnes & Noble, Inc. shareholders'
equity 574,311 603,510 Commitments and
contingencies - - Total liabilities and
shareholders' equity $ 1,932,921 $ 2,012,782
BARNES & NOBLE, INC. AND SUBSIDIARIES Earnings (Loss)
Per Share (In thousands, except per share data)
(Unaudited) 13 weeks ended 13
weeks ended 52 weeks ended 52 weeks
ended April 29, 2017 April 30, 2016 April 29,
2017 April 30, 2016 Numerator for basic income (loss)
per share: Net income (loss) from continuing operations $
(13,428 ) $ (30,608 ) $ 22,023 $ 14,700 Inducement fee paid upon
conversion of Series J preferred stock - - - (3,657 ) Preferred
stock dividends paid in shares - - - (1,783 ) Accretion of
dividends on preferred stock - - - (4,204 ) Less allocation of
dividends to participating securities (17 ) (220 ) (576 ) (1,219 )
Less allocation of undistributed earnings to participating
securities - - - -
Net income (loss) from continuing operations available to
common shareholders $ (13,445 ) $ (30,828 ) $ 21,447 $ 3,837 Net
loss from discontinued operations available to common shareholders
- - - (39,146 )
Net income (loss) available to common shareholders $ (13,445 ) $
(30,828 ) $ 21,447 $ (35,309 )
Numerator for
diluted income (loss) per share: Net income from continuing
operations available to common shareholders $ (13,445 ) $ (30,828 )
$ 21,447 $ 3,837 Accretion of dividends on preferred stock (a) - -
- - Allocation of undistributed earnings to participating
securities - - - - Less diluted allocation of undistributed
earnings to participating securities - -
- - Net income (loss) from
continuing operations available to common shareholders (13,445 )
(30,828 ) 21,447 3,837 Net loss from discontinued operations
available to common shareholders - -
- (39,146 ) Net income (loss) available to
common shareholders $ (13,445 ) $ (30,828 ) $ 21,447 $
(35,309 )
Denominator for basic income (loss) per
share: Basic weighted average common shares 72,054 73,680
72,188 72,410
Denominator for diluted income (loss) per
share: Basic weighted average common shares 72,054 73,680
72,188 72,410 Average dilutive options - - 63 118 Average dilutive
non-participating securities - -
77 14 Diluted weighted average common shares
72,054 73,680 72,328
72,542
Basic income (loss) per common
share: Income (loss) from continuing operations $ (0.19 ) $
(0.42 ) $ 0.30 $ 0.05 Loss from discontinued operations -
- - (0.54 ) Basic income
(loss) per common share $ (0.19 ) $ (0.42 ) $ 0.30 $ (0.49 )
Diluted income (loss) per common share: Income (loss)
from continuing operations $ (0.19 ) $ (0.42 ) $ 0.30 $ 0.05 Loss
from discontinued operations - -
- (0.54 ) Diluted income (loss) per common share $
(0.19 ) $ (0.42 ) $ 0.30 $ (0.49 )
(a) Although the Company was in a net income position during the
52 weeks ended April 30, 2016, the dilutive effect of the Company’s
convertible preferred shares was excluded from the calculation of
income per share using the two-class method because the effect
would be antidilutive.
BARNES & NOBLE, INC. AND SUBSIDIARIESNon-GAAP
Reconciliation & Forward-Looking Statement(In
millions)(Unaudited)
Fiscal 2016 Fiscal 2017
Forward-Looking Fiscal
2018
Adjusted EBITDA $ 186 $ 187 Charges (35 ) (a)
(15 ) (b) EBITDA $ 151 $ 172
EBITDA $ 151 $ 172 $ 180 Depreciation and amortization (136
) (118 ) (100 ) Operating income $ 15 $ 54
$ 80
(a) Including pension settlement charge, executive severance
related to the B&N College spin-off and a publishing contract
impairment.
(b) Including charges related to cost reduction initiatives and
costs associated with the CEO departure.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170622005594/en/
Media:Barnes & Noble,
Inc.Mary Ellen Keating, 212-633-3323Senior Vice PresidentCorporate
Communicationsmkeating@bn.comorInvestors:Barnes & Noble, Inc.Andy
Milevoj, 212-633-3489Vice President, Investor
Relationsamilevoj@bn.com
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