Barnes & Noble surprises in Q4

Ongoing cost reductions helped the nation's largest bookstore retailer narrow its loss in its fourth quarter even as its sales continued to slide.



Barnes & Noble posted a net loss of $13.4 million, or $0.19 per share, for the quarter, compared to a loss of $30.6 million, or $0.42 per share, in the prior year. For the quarter, the company's retail division generated an operating loss of $15.9 million, while Nook incurred an operating loss of $7.9 million, for a total operating loss of $23.8 million.



Total sales fell 6.3% to $821 million for the quarter, ended April 29. Same-store sales declined 6.3%. Online sales increased 2.9%.



For the full year, Barnes & Noble reported sales of $3.9 billion, down 6.5% over the previous year. Comparable store sales declined 6.3% for the year. Online sales increased 3.7%.



"While fiscal 2017 proved to be a challenging year for the company, we reduced costs by $137 million, enabling us to sustain our profitability level," said Demos Parneros, CEO, Barnes & Noble, Inc. "In fiscal 2018, we are focusing on ways to improve the business and reignite sales through an aggressive test and learn process and companywide simplification process that will take out costs."



Neil Saunders, managing director of GlobalData Retail, noted that helpful as Barnes & Noble's cost reductions, they do not hold the key to a sustainable future.



"Indeed, we would argue that they (cost reductions) are simply a necessity of a business that is still losing customers and their spend," Saunders said. To be successful, B&N must, at the very least, stabilize its top line."



Saunders added that Barnes & Noble should focus more on its online operation, and on making changes to its stores.



"In our view, B&N is simply not an online destination for many shoppers buying books and associated items — something that the company needs to correct," he said.



Barnes & Noble operated 633 stores at the end of the quarter. It ended the fiscal year with $64.9 million of debt under its $750 million credit facility. For fiscal year 2018, the company expects comparable bookstore sales to decline in the low single digits and full year consolidated EBITDA to be approximately $180 million.