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Barnes & Noble Keeps Moving Forward

By Steve Symington – Mar 4, 2016 at 5:59PM

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The bookseller turned in a solid quarter as it continued to pare NOOK losses.

Image source: Barnes & Noble.

Barnes & Noble (BKS) released fiscal third-quarter 2016 results Thursday, and investors are rightly pleased with its ongoing turnaround. Let's take a look at what the bookseller accomplished in its latest quarter.

Barnes & Noble results: The raw numbers


Fiscal Q3 2016 Actuals

Fiscal Q3 2015 Actuals

Growth (YOY)


$1.41 billion

$1.44 billion


Net Income (from continuing operations)

$80.3 million

$39.0 million


EPS (from continuing operations) 




Data Source: Barnes & Noble.

What happened with Barnes & Noble this quarter?

  • Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 1.6% year over year, to $169 million.
  • Retail sales fell 1.2% year over year, to $1.38 billion, primarily due to lower online sales and store closures.
  • Comparable-store sales rose 0.2%, while Retail Core comparable-store sales -- which excludes NOOK products -- rose 1.3% year over year. That's on top of a 1.7% increase in the same year-ago period, and continues last quarter's momentum, when the metric rose 1.6% year over year
    • Driven by strength in adult coloring books, and the toys and games, music, and gift businesses.
  • Retail EBITDA fell 7.8% year over year, to $180.2 million, due to a combination of top-line declines, increased advertising, and a $4 million non-cash publishing contract impairment charge.
  • NOOK sales fell 33.3%, to $51.7 million, due to lower device and content sales.
  • NOOK EBITDA losses decreased 61.5%, to $11.2 million, thanks to Barnes & Noble's continued focus on "cost rationalization efforts."
  • Paid $11.5 million in dividends, and repurchased 1.8 million shares for $16.5 million (average price of $9.17 per share).

What management had to say 
Barnes & Noble CEO Ron Boire stated,

We are encouraged by the improved bookstore sales trends that are enabling us to close the least amount of stores since fiscal 2000 and are excited to introduce our new store concept later this year, with the opening of four new stores throughout fiscal 2017. While we still have significant work to do to improve sales at, we are encouraged by the site's improved performance during the quarter, and are making investments to drive traffic and sales. I am also pleased with the progress that has been made to reduce NOOK losses. We remain committed to providing a great digital reading experience to our customers, while exploring all opportunities to further reduce losses.  Moving forward, our top priorities are growing bookstore and online sales, reducing Retail and NOOK expenses, and growing our Membership base.

Looking forward
For the full fiscal year 2016, Barnes & Noble reiterated its guidance for comparable-store sales to be roughly flat with 2015, and for core comparable-store sales, excluding NOOK products, to rise around 1% for the year. Barnes & Noble also continues to expect to further narrow full fiscal-year EBITDA losses from the NOOK segment.

In the end, Barnes & Noble's latest quarter didn't offer any big surprises. But that's arguably just what investors had wanted to hear as it inches back toward sustained top- and bottom-line growth. As long as Barnes & Noble's core retail business continues to improve as losses from its NOOK segment narrow, the company should continue to prove ever-more capable of efficiently creating shareholder value.

Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of Barnes & Noble. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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