Barnes & Noble (NYSE: BKS) continues to see its sales fall while it loses money, and customers. The chain, which has been steadily moving in the wrong direction, reported second-quarter fiscal 2017 sales of $858.5 million, down 4% as compared to the prior year. Retail sales, which include Barnes & Noble stores and BN.com, declined 3.5% to $830.7 million for the quarter. In addition, despite a boost from the release of Harry Potter and the Cursed Child, comparable-store sales dropped by 3.2% due to lower traffic. And, on the digital side, NOOK sales put up their now-customary double-digit percentage decline, dropping 19.4% to to $35.0 million.
Barnes & Noble did have some positive news: It was able to trim its loss for the quarter. The company’s consolidated Q2 net loss came in at $20.4 million, or $0.29 per share, an improvement from the loss of $27.2 million, or $0.36 per share, in fiscal 2016.
“While we are pleased to have improved our performance due to expense reductions, we did experience sluggish sales, which we believe are directly related to the election cycle,” said CEO Len Riggio in the earnings release. “With the election behind us, we hope and expect sales will improve over the holidays.”
B&N anticipates continued losses
While Barnes & Noble has been testing new business models and expanding its product lines, the company does not expect to become profitable in fiscal 2017. The chain “continues to expect fiscal 2017 comparable store sales to decline in the low single digits,” according to the earnings release.
It’s a fairly dismal picture for a company that has struggled to show it has a reason to exist in a transformed retail environment. Riggio, who postponed his retirement to take over the CEO job, has not shown that his leadership can do more than slow the decline.
What happens next?
It’s a question of where bottom is for sales. It’s possible that the chain has a future, but so far, it hasn’t shown what that might be. There’s no reason to expect a turnaround in sales, and the NOOK is effectively a dead product.
Any hope for Barnes & Noble will come from changes it has been testing. That might mean offering more food, selling beer and wine, or doing something else entirely. If there’s anything positive that can be taken from last quarter’s numbers, it’s that Riggio has shown an ability to cut losses in order to buy the chain more time. Still, that will only matter if it can find a model that works better than the one it currently operates under.
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