Sales fell across the board at Barnes & Noble in the second quarter ended October 29, 2016 compared to the same period in fiscal 2016.
Total revenue dropped 4.0% in the quarter compared to a year ago, to $858.5 million. Sales in the retail group, which includes BN.com, fell 3.5%, to $830.7 million, with comparable store sales dropping 3.2%. B&N attributed the decline to lower store traffic, which was partially offset by solid sales of Harry Potter and the Cursed Child. Nook sales of both digital content and devices fell 19.4%, to $35.0 million in the quarter.
B&N chairman and CEO Len Riggio acknowledged that sales were sluggish in the quarter, which he said were “directly related to the election cycle: "With the election behind us, we hope and expect sales will improve over the holidays." In a conference call with analysts, Riggio said that a detailed look at the performance of comp sales showed that sales were off the most during prime time television viewing hours and were close to normal in other areas of the day. While acknowledging that B&N is not sure where the "new normal" will be he still expects comp sales to improve before and through the holidays.
B&N’s loss for the most recent quarter was $20.4 million, down from $27.2 million in last year’s second quarter, a figure that excludes $12.0 million in losses from discounted operations.
The company also reported that consolidated second quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) was $729,000, a $21.2 million improvement versus the prior year. Nook EBITDA losses were $2.7 million, down from $21.3 million a year ago, while EBITDA in the retail group increased $2.7 million to $3.5 million, as lower severance charges offset the sales decrease.
Looking at prospects for the full fiscal year that ends next April, B&N said it continues to expect comparable store sales to decline in the low single digits and full year consolidated EBITDA to be in a range of $200 million to $250 million. Retail EBITDA is expected to be in a range of $240 million to $280 million, excluding the impact of any charges related to its cost reduction initiatives and costs associated with the recent departure of Ron Boire as CEO. Boire received an exit package of $4.8 million. NOOK EBITDA losses are expected to decline to a range of $30 million to $40 million, including previously announced transitional costs.
B&N Names New COO
Barnes & Noble also announced that it has named Demos Parneros chief operating officer. Parneros, whose appointment is effective immediately, will report to Len Riggio, chairman and CEO of Barnes & Noble. B&N said that in his new role as COO, Parneros “will work closely with Mr. Riggio on all aspects of Company operations including stores, merchandising, e-commerce, systems, and real estate.”
The post of COO has been vacant since this summer, when Jaime Carey left that role to become president of development and the restaurant group.
Parneros joins B&N from Staples, where he was president of North American stores and online. According to B&N, Parneros has 30 years of leadership experience in all aspects of retail management, including operations, human resources, merchandising, e-commerce, marketing, and real estate.
The story has been updated to include remarks made during the analysts conference call.
