Barnes & Noble sales plummet
New York – Barnes & Noble employed cost-cutting measures that shifted net loss to net income for the second quarter of fiscal 2014 even as net sales took a tumble. Net income of $13.2 million compared to a roughly $502 million net loss reported in the second quarter of fiscal 2013.
In contrast, net sales of $1.7 billion were down about 8% from $1.88 billion. Revenues declined across all segments of the company, but the decrease was particularly acute in sales of its Nook e-reader, which fell about 32% to $107.8 million with prices and sales both falling.
The company reaffirmed its previously issued full-year guidance, in which it expects retail same-store sales to decline in the high single digits, core retail same-store bookstore sales to decline in the low- to mid-single digits and college same-store sales to decline in the low single digits.
“During the second quarter, Barnes & Noble grew earnings through improved margins and reduced expenses, while also completing another successful college rush season,” said Michael P. Huseby, president of Barnes & Noble, Inc. and CEO of Nook Media. “The company is focused on executing its plans for the holiday season and our booksellers are prepared to welcome holiday shoppers and recommend thoughtful gift ideas for everyone on their list. We have a terrific book title line-up this holiday season, a leading assortment of educational toys and games and a full selection of Nook devices, including our recently released new Nook GlowLight.”
Aeropostale adopts poison pill
New York – Aeropostale Inc. has adopted a poison pill that would be set into motion if a stockholder buys 10% of the company.
The struggling retailer said it was not adopting the plan, effective November 26, 2013, in response to any takeover proposal. Rather, the plan aims to provide stockholders with adequate time to fully assess a takeover bid, and, if appropriate, allow the board time to explore alternatives to maximize stockholder value, the company said.
The announcement comes less than a week after investment firm Hirzel Capital Management LLC disclosed that it bought a 6% stake in the retailer. Also, last week, Aeropostale shareholder Crescendo Partners urged the chain to sell itself. Other investors have expressed concern about the retailer.
The company intends to put the plan to a stockholder vote at its 2014 annual stockholders meeting. The plan will expire on that day if it is not approved.
Barnes & Noble backs into holiday season
Barnes & Noble faces all the same headwinds as other retailers this holiday season, but its challenges are compounded by the fact that it continues to derive the majority of its revenues from declining sales of physical books.
The operator of 673 book stores said it expects holiday same store sales to decline in the high single digits following a 4.9% comp decrease during the second quarter ended October 26.
Total Barnes & Noble sales declined 8% to $1.7 billion with each of the company’s three segments reporting reduced sales.
The retail division, which includes sales from BN.com, declined 7.5% to $921 million, the college division declined 4.6% to $737 million and most worrisome is the decline seen in the NOOK digital division where sales dropped 32.2% to $108 million. Of that amount, NOOK digital content sales were $57 million for the quarter, a decline of 21.2% compared to a year ago, due to lower average selling prices and lower device unit sales. NOOK device and accessories sales were $51 million for the quarter, a decrease of 41.3% from a year ago, due to lower unit selling volume and lower average selling prices.
Despite the sales erosion, Barnes & Noble mustered a modest profit thanks to expense control. Net earnings during the second quarter increased to $13.2 million, or 15 cents a share, compared to net earnings of $500,000, or a loss of seven cents a share the prior year.
“During the second quarter, Barnes & Noble grew earnings through improved margins and reduced expenses, while also completing another successful college rush season,” said Michael P. Huseby, president of Barnes & Noble, Inc. and CEO of NOOK Media. “The company is focused on executing its plans for the holiday season and our booksellers are prepared to welcome holiday shoppers and recommend thoughtful gift ideas for everyone on their list. We have a terrific book title line-up this holiday season, a leading assortment of educational toys and games and a full selection of NOOK devices, including our recently released new NOOK GlowLight.”