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Why Barnes & Noble Stock Plunged Today

By Steve Symington - Updated Apr 16, 2019 at 9:04PM

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The bookseller warned it might reduce its earnings guidance next month. Here's what investors need to know.

Check out the latest Barnes & Noble earnings call transcript.

What happened

Shares of Barnes & Nobles (BKS) were down 12.1% as of 2:30 p.m. EST Thursday after the bookseller offered an update on its holiday-season results. 

More specifically, Barnes & Noble revealed that, while comparable-store sales climbed 4% between Black Friday and News Year's Day -- marking the metric's best performance in several years -- it also warned it may reduce its holiday-quarter earnings guidance by as much as 10% due to higher advertising and promotional activity.

Barnes & Noble storefront lit up in evening.

IMAGE SOURCE: BARNES & NOBLE.

So what

"Although we got off to a slow start, sales picked up momentum as we moved deeper into the season, and we finished strongly in accordance with our expectations," elaborated Barnes & Noble Chairman Len Riggio. "The entire organization deserves credit for our great results, especially our 23,000 local booksellers."

The company credited its growth to a combination of its new ad campaign and website improvements, as well as higher promotions and its "buy online and pick up in store" initiative. But the market rightly is frowning, considering that growth is coming at the expense of Barnes & Noble's bottom line as the company strives to return to sustained, profitable growth.

Now what

Barnes & Noble is set to announce final holiday-quarter results in late February. For perspective, its initial guidance, provided during its fiscal Q2 2019 call in November, called for full fiscal-year EBITDA of $175 million to $200 million. While it remains to be seen exactly how much it will lower that range per its warning today, it's no surprise to see shares plunging in the meantime.

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