For most retailers, the holiday season is the most important of the year. But for college bookstore operator Barnes & Noble Education (NYSE:BNED), a huge portion of its overall revenue comes in during the back-to-school quarter, and coming into Tuesday's fiscal second-quarter financial report, B&N Education investors were looking for solid gains in the company's bottom line. Instead, what B&N Education revealed was a slight decline in adjusted earnings, along with slightly weaker sales than most of those following the stock had expected to see. Let's take a closer look at Barnes & Noble Education and see why things didn't go according to plan.

Image source: Barnes & Noble Education.

Are earnings at Barnes & Noble Education dropping out?

Barnes & Noble Education's fiscal second-quarter results fell short of what shareholders had hoped to see from the company. Sales came in at $770.7 million, which was up 2% from the year-ago quarter but slightly less than the $779 million in revenue that most investors had expected. B&N fared worse on the earnings side of the equation, posting adjusted net income of $29.7 million, down 11% from last year's fiscal second quarter. That produced adjusted earnings of $0.63 per share, which missed the consensus forecast by $0.15 per share.

Poring through B&N Education's numbers more closely, several of the disturbing trends we've seen in past quarters continued to appear this time around as well. Comparable store sales once again fell, posting a 2.9% decrease. The company said that textbook sales were the biggest component of the declining, falling 3.3% from the year-ago quarter. General merchandise sales also performed poorly, reversing a gain in the previous period and falling 1.3%.

From an operational standpoint, B&N Education kept trying to move forward. However, the company opened only a single store during the period, bringing its total store count to 771 and marking the 34th new store that it has opened during the first half of the fiscal year. B&N also said that it doesn't expect a huge number of openings for the remainder of the year either, with plans for just two additional store locations to come on line.

B&N Education CEO Max Roberts pointed to tough conditions in the college environment generally. "Though our new business enabled us to grow total sales," Roberts said, "comparable store sales declined as a result of lower enrollments and a softer retail environment." The CEO also pointed to B&N's new price-matching program in driving greater engagement among students and offset expected drops in enrollment in the future.

What's ahead for B&N Education?

B&N Education sees its fall rush efforts having staying power, and it expects to continue its price-matching activity for the spring rush as well. In addition, Roberts said that he sees the company "adjusting our promotional strategy in a targeted and disciplined manner to reflect current market conditions." In combination with cost management initiatives designed to minimize any further earnings declines, B&N Education wants to remain ready to serve educational institutions seeking to outsource their textbook and retail operations.

From a guidance perspective, however, Barnes & Noble Education seemed a bit more downbeat. The company nudged investors toward the higher end of its previous sales growth guidance, expecting gains of 3% to 4% on the top line now. However, B&N is much more pessimistic about its comparable store sales figures than it was previously, now predicting a drop of 2% to 3% on the year. Adjusted pre-tax earnings will only climb by mid-single-digit percentages, putting further potential pressure on B&N's bottom-line results.

B&N Education investors weren't happy with the news, sending the stock down 10% in pre-market trading immediately following the announcement. For the company to realize its full potential, Barnes & Noble Education will have to keep persuading major institutions to turn to it for outsourcing services. Even then, B&N will face obstacles if student enrollment declines don't reverse themselves soon.