Shares of college-based book retailer Barnes & Noble Education (BNED -4.31%) fell sharply at the start of trading on Nov. 30, dropping as much as 22% at one point in early trading. The big news was the company's fiscal second-quarter 2022 earnings release, which hit the Street before Wall Street opened this morning. Investors were clearly unhappy with what they saw.
It may seem obvious, but running a bookstore on a college campus is highly seasonal. The start of the new school year is, as you might expect, the peak selling point of the year. That period is encompassed in Barnes & Noble Education's fiscal second-quarter results. On the top line the company posted sales of $627 million, up 5.3% from the prior year. On the bottom line, earnings came in at $0.41 per share, up from just $0.15 during the fiscal second quarter of 2021.
Although that's a year-over-year improvement on both fronts, Wall Street was expecting much better results, calling for sales of $663 million and earnings per share of $0.82. So Barnes & Noble Education had a material miss this quarter, which investors don't like to see. However, the issue really runs deeper. The second quarter of fiscal 2021 was directly impacted by the coronavirus pandemic, so the numbers were relatively weak and understandably so. The second quarter of fiscal 2022 benefited from colleges reopening to students, but clearly the benefit wasn't as big as investors would have liked. Even management noted that its "textbook business was essentially flat." That's not a good sign, especially as a new coronavirus variant has started to gain attention.
For reference, in the fiscal second quarter of 2020, before the pandemic, Barnes & Noble Education had revenue of $772 million and earnings of $0.74 per share. So it is pretty clear that this college-tied retailer's business is still struggling through a major downturn. Although that's not the company's fault, investors were obviously hoping for better news today given that the economy, and colleges, have started to reopen again.