BN still on the hook for Nook in Q3

As Barnes & Noble tries to write a new, more profitable chapter by spinning off its college division, the company reported that its Nook division is still weighing on revenue.

The company said same store sales at Barnes & Noble Inc. (excluding Nook) increased 1.7% in the third quarter, which ended Jan. 31. Analysts had estimated a 1% decline. Taking Nook sales into account, same store sales declined .3%. Third quarter revenue of $1.96 billion declined $35 million as compared to the prior year.

“We are pleased with the performance of our businesses,” said Michael P. Huseby, CEO of Barnes & Noble Inc. “Comparable sales increased 1.7% on the continued stabilization of the physical book business, as well as continued growth in non-book categories such as Educational Toys & Games and Gifts. While College continues to invest in its future, its top line sales grew through new school acquisitions and better than expected comparable sales trends. NOOK’s EBITDA loss was cut in half due to ongoing cost rationalization efforts. This performance across all businesses further supports our belief that now is the right time to separate the College business. The separation will allow each business to optimize their strategic opportunities, given their respective growth profiles, and specifically enable College to pursue opportunities in the growing educational services market.”

Barnes & Noble announced plans in February to separate its college bookstore business from its main retail business by August. The company has been adding toys, games and other non-book items to its bookstores to boost sales.

For fiscal 2015, the company expects same store sales to decline in the low-single digits. The company also expects full fiscal year EBITDA losses in the NOOK segment to decline versus the prior year.

Barnes & Noble Inc. operates 649 stores in 50 states.