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June 21, 2018 at 8:30 AM EDT
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Barnes & Noble Reports Fiscal 2018 Year-End Financial Results

NEW YORK--(BUSINESS WIRE)--Jun. 21, 2018-- Barnes & Noble, Inc. (NYSE:BKS) today reported sales and earnings for its fiscal 2018 fourth quarter and full-year ended April 28, 2018.

Total sales were $786 million for the quarter and $3.7 billion for the full year, decreasing 4.3% and 6.0% over the prior year periods, respectively. Comparable store sales declined 4.1% for the fourth quarter and 5.4% for the full year.

The consolidated fourth quarter net loss was $21.1 million, or $0.29 per share, compared to a loss of $13.4 million, or $0.19 per share, in the prior year. Fourth quarter results include $7.7 million of non-recurring charges associated with the Company’s strategic initiatives.

The fiscal 2018 consolidated net loss was $125.5 million, or $1.73 per share, compared to net earnings of $22.0 million, or $0.30 per share, in the prior year. Fiscal 2018 results include non-cash asset impairment charges of $135.4 million, $16.2 million of severance charges and $15.3 million of strategic initiative costs.

Excluding non-recurring or unusual charges in both years, consolidated EBITDA was $6.7 million in the fourth quarter, as compared to $5.6 million a year ago, and $145.4 million in fiscal 2018, as compared to $187.2 million a year ago. The company reduced expenses by $15 million in the fourth quarter and $52 million for the full year, excluding non-recurring or unusual charges.

“In fiscal 2018 we developed a long-term strategic turnaround plan, which we continue to execute,” said Demos Parneros, Chief Executive Officer of Barnes & Noble, Inc. “Our plan, which includes sales improvements and cost reductions, is expected to yield immediate improvement in fiscal 2019, resulting in EBITDA of $175 million to $200 million, and further benefits in the following years. We also strengthened our leadership team in key areas of the business. They will be instrumental in overseeing the turnaround.”

Outlook

For fiscal year 2019, the Company expects consolidated EBITDA to be in a range of $175 million to $200 million.

Conference Call

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, June 21, 2018, and is accessible at investors.barnesandnobleinc.com.

Barnes & Noble, Inc. will report fiscal 2019 first quarter results on or about September 6, 2018.

About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS) is the nation’s largest retail bookseller, and a leading retailer of content, digital media and educational products. The Company operates 630 Barnes & Noble bookstores in 50 states, and one of the Web’s premier e-commerce sites, BN.com (www.bn.com). The Nook Digital business offers a lineup of popular NOOK® tablets and eReaders and an expansive collection of digital reading and entertainment content through the NOOK Store®. The NOOK Store (www.nook.com) features digital books, periodicals and comics, and offers the ability to enjoy content across a wide array of popular devices through Free NOOK Reading Apps™ available for Android™, iOS® and Windows®.

General information on Barnes & Noble, Inc. can be obtained by visiting the Company's corporate website at www.barnesandnobleinc.com.

Forward-Looking Statements

This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information relating to Barnes & Noble that are based on the beliefs of the management of Barnes & Noble as well as assumptions made by and information currently available to the management of Barnes & Noble. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to Barnes & Noble or the management of Barnes & Noble, identify forward-looking statements.

Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble’s products, low growth or declining sales and net income due to various factors, including store closings, higher-than-anticipated or increasing costs, including with respect to store closings, relocation, occupancy (including in connection with lease renewals) and labor costs, the effects of competition, the risk of insufficient access to financing to implement future business initiatives, risks associated with data privacy and information security, risks associated with Barnes & Noble’s supply chain, including possible delays and disruptions and increases in shipping rates, various risks associated with the digital business, including the possible loss of customers, declines in digital content sales, risks and costs associated with ongoing efforts to rationalize the digital business, risks associated with the eCommerce business, including the possible loss of eCommerce customers and declines in eCommerce sales, the risk that financial and operational forecasts and projections are not achieved, the performance of Barnes & Noble’s initiatives including but not limited to new store concepts and eCommerce initiatives, unanticipated adverse litigation results or effects, potential infringement of Barnes & Noble’s intellectual property by third parties or by Barnes & Noble of the intellectual property of third parties, and other factors, including those factors discussed in detail in Item 1A, “Risk Factors,” in Barnes & Noble’s Annual Report on Form 10-K for the fiscal year ended April 28, 2018, and in Barnes & Noble’s other filings made hereafter from time to time with the SEC.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Barnes & Noble or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Barnes & Noble undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this communication.

 
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                         
                         
      13 weeks ended     13 weeks ended     52 weeks ended     52 weeks ended
      April 28, 2018     April 29, 2017     April 28, 2018     April 29, 2017
                         
Sales     $ 786,076       $ 821,220       $ 3,662,280       $ 3,894,558  
Cost of sales and occupancy       557,075         578,733         2,551,077         2,682,356  
Gross profit       229,001         242,487         1,111,203         1,212,202  
Selling and administrative expenses       230,042         238,508         999,109         1,040,007  
Depreciation and amortization       24,498         27,804         106,340         117,887  
Goodwill impairment       -         -         133,612         -  
Operating income (loss)       (25,539 )       (23,825 )       (127,858 )       54,308  
Interest expense, net       2,583         1,843         9,837         7,509  
Income (loss) before taxes       (28,122 )       (25,668 )       (137,695 )       46,799  
Income tax provision (benefit)       (7,050 )       (12,240 )       (12,215 )       24,776  
Net income (loss)     $ (21,072 )     $ (13,428 )     $ (125,480 )     $ 22,023  
                         
Income (loss) per common share:                        
Basic     $ (0.29 )     $ (0.19 )     $ (1.73 )     $ 0.30  
Diluted     $ (0.29 )     $ (0.19 )     $ (1.73 )     $ 0.30  
                         
Weighted average common shares outstanding:                        
Basic       72,653         72,054         72,588         72,188  
Diluted       72,653         72,054         72,588         72,328  
                         
Dividends declared per common share     $ 0.15       $ 0.15       $ 0.60       $ 0.60  
                         
Percentage of sales:                        
Sales       100.0 %       100.0 %       100.0 %       100.0 %
Cost of sales and occupancy       70.9 %       70.5 %       69.7 %       68.9 %
Gross profit       29.1 %       29.5 %       30.3 %       31.1 %
Selling and administrative expenses       29.3 %       29.0 %       27.3 %       26.7 %
Depreciation and amortization       3.1 %       3.4 %       2.9 %       3.0 %
Goodwill impairment       0.0 %       0.0 %       3.6 %       0.0 %
Operating income (loss)       -3.2 %       -2.9 %       -3.5 %       1.4 %
Interest expense, net       0.3 %       0.2 %       0.3 %       0.2 %
Income (loss) before taxes       -3.6 %       -3.1 %       -3.8 %       1.2 %
Income tax provision (benefit)       -0.9 %       -1.5 %       -0.3 %       0.6 %
Net income (loss)       -2.7 %       -1.6 %       -3.4 %       0.6 %
                                         

 

                         
BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
                           
                           
        13 weeks ended     13 weeks ended     52 weeks ended     52 weeks ended
        April 28, 2018     April 29, 2017     April 28, 2018     April 29, 2017
                           
Sales                          
  Retail     $ 765,452       $ 796,184       $ 3,575,614       $ 3,784,655  
  NOOK       25,093         31,990         111,487         146,514  
  Elimination       (4,469 )       (6,954 )       (24,821 )       (36,611 )
Total       $ 786,076       $ 821,220       $ 3,662,280       $ 3,894,558  
                           
Gross Profit                        
  Retail     $ 216,310       $ 229,069       $ 1,054,195       $ 1,148,542  
  NOOK       12,691         13,418         57,008         63,660  
Total       $ 229,001       $ 242,487       $ 1,111,203       $ 1,212,202  
                           
Selling and Administrative Expenses                        
  Retail     $ 218,494       $ 220,826       $ 945,643       $ 959,002  
  NOOK       11,548         17,682         53,466         81,005  
Total       $ 230,042       $ 238,508       $ 999,109       $ 1,040,007  
                           
Goodwill Impairment                        
  Retail     $ -       $ -       $ 133,612       $ -  
  NOOK       -         -         -         -  
Total       $ -       $ -       $ 133,612       $ -  
                           
EBITDA                          
  Retail     $ (2,184 )     $ 8,243       $ (25,060 )     $ 189,540  
  NOOK       1,143         (4,264 )       3,542         (17,345 )
Total       $ (1,041 )     $ 3,979       $ (21,518 )     $ 172,195  
                           
Depreciation and Amortization                        
  Retail     $ (21,843 )     $ (24,121 )     $ (94,334 )     $ (98,877 )
  NOOK       (2,655 )       (3,683 )       (12,006 )       (19,010 )
Total       $ (24,498 )     $ (27,804 )     $ (106,340 )     $ (117,887 )
                           
Operating Income (Loss)                        
  Retail     $ (24,027 )     $ (15,878 )     $ (119,394 )     $ 90,663  
  NOOK       (1,512 )       (7,947 )       (8,464 )       (36,355 )
Total       $ (25,539 )     $ (23,825 )     $ (127,858 )     $ 54,308  
                           
Net Income (Loss)                        
  Operating income (loss)     $ (25,539 )     $ (23,825 )     $ (127,858 )     $ 54,308  
  Interest expense, net       (2,583 )       (1,843 )       (9,837 )       (7,509 )
  Income tax provision (benefit)       7,050         12,240         12,215         (24,776 )
Total       $ (21,072 )     $ (13,428 )     $ (125,480 )     $ 22,023  
                           
                           
                           
Percentage of sales:                        
                           
Gross Margin                        
  Retail       28.3 %       28.8 %       29.5 %       30.3 %
  NOOK       61.5 %       53.6 %       65.8 %       57.9 %
Total         29.1 %       29.5 %       30.3 %       31.1 %
                           
Selling and Administrative Expenses                        
  Retail       28.5 %       27.7 %       26.4 %       25.3 %
  NOOK       56.0 %       70.6 %       61.7 %       73.7 %
Total         29.3 %       29.0 %       27.3 %       26.7 %
                           
Goodwill Impairment                        
  Retail       0.0 %       0.0 %       3.7 %       0.0 %
  NOOK       0.0 %       0.0 %       0.0 %       0.0 %
Total         0.0 %       0.0 %       3.6 %       0.0 %
                           
EBITDA                          
  Retail       -0.3 %       1.0 %       -0.7 %       5.0 %
  NOOK       5.5 %       -17.0 %       4.1 %       -15.8 %
Total         -0.1 %       0.5 %       -0.6 %       4.4 %
                           
Depreciation and Amortization                        
  Retail       -2.9 %       -3.0 %       -2.6 %       -2.6 %
  NOOK       -12.9 %       -14.7 %       -13.9 %       -17.3 %
Total         -3.1 %       -3.4 %       -2.9 %       -3.0 %
                           
Operating Income (Loss)                        
  Retail       -3.1 %       -2.0 %       -3.3 %       2.4 %
  NOOK       -7.3 %       -31.7 %       -9.8 %       -33.1 %
Total         -3.2 %       -2.9 %       -3.5 %       1.4 %
                                           

 

             
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
             
      April 28, 2018     April 29, 2017
             
ASSETS            
Current assets:            
Cash and cash equivalents     $ 10,769       $ 11,993  
Receivables, net       64,562         67,294  
Merchandise inventories, net       958,196         946,909  
Prepaid expenses and other current assets       65,153         101,816  
Total current assets       1,098,680         1,128,012  
             
Property and equipment:            
Land and land improvements       2,541         2,541  
Buildings and leasehold improvements       1,080,952         1,072,007  
Fixtures and equipment       1,523,485         1,608,433  
        2,606,978         2,682,981  
Less accumulated depreciation and amortization       2,351,454         2,406,859  
Net property and equipment       255,524         276,122  
             
Goodwill       71,593         207,381  
Intangible assets, net       309,649         310,205  
Other non-current assets       14,122         11,201  
Total assets     $ 1,749,568       $ 1,932,921  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
Accounts payable     $ 458,896       $ 473,686  
Accrued liabilities       260,209         283,157  
Gift card liabilities       323,465         351,424  
Total current liabilities       1,042,570         1,108,267  
             
Long-term debt       158,700         64,900  
Deferred taxes       52,044         86,132  
Other long-term liabilities       84,271         99,311  
             
Shareholders' equity:            
Common stock; $0.001 par value; 300,000 shares authorized;            
112,238 and 111,933 shares issued, respectively       112         112  
Additional paid-in capital       1,749,555         1,741,380  
Accumulated other comprehensive income       276         315  
Retained earnings       (216,236 )       (46,425 )
Treasury stock, at cost, 39,585 and 39,497 shares, respectively       (1,121,724 )       (1,121,071 )
Total Barnes & Noble, Inc. shareholders' equity       411,983         574,311  
Commitments and contingencies       -         -  
Total liabilities and shareholders' equity     $ 1,749,568       $ 1,932,921  
             

 

                         
BARNES & NOBLE, INC. AND SUBSIDIARIES
Earnings (Loss) Per Share
(In thousands, except per share data)
(Unaudited)
                         
                         
      13 weeks ended     13 weeks ended     52 weeks ended     52 weeks ended
      April 28, 2018     April 29, 2017     April 28, 2018     April 29, 2017
Numerator for basic income (loss) per share:                        
Net income (loss)     $ (21,072 )     $ (13,428 )     $ (125,480 )     $ 22,023  
Less allocation of dividends to participating securities       (21 )       (17 )       (80 )       (576 )
Less allocation of undistributed earnings to participating securities       -         -         -         -  
Net income (loss) available to common shareholders     $ (21,093 )     $ (13,445 )     $ (125,560 )     $ 21,447  
                         
Numerator for diluted income (loss) per share:                        
Net income (loss) available to common shareholders     $ (21,093 )     $ (13,445 )     $ (125,560 )     $ 21,447  
Allocation of undistributed earnings to participating securities       -         -         -         -  
Less diluted allocation of undistributed earnings to participating securities       -         -         -         -  
Net income (loss) available to common shareholders     $ (21,093 )     $ (13,445 )     $ (125,560 )     $ 21,447  
                         
Denominator for basic income (loss) per share:                        
Basic weighted average common shares       72,653         72,054         72,588         72,188  
                         
Denominator for diluted income (loss) per share:                        
Basic weighted average common shares       72,653         72,054         72,588         72,188  
Average dilutive options       -         -         -         63  
Average dilutive non-participating securities       -         -         -         77  
Diluted weighted average common shares       72,653         72,054         72,588         72,328  
                         
Income (loss) per common share:                        
Basic     $ (0.29 )     $ (0.19 )     $ (1.73 )     $ 0.30  
Diluted     $ (0.29 )     $ (0.19 )     $ (1.73 )     $ 0.30  
                         

 

                       
BARNES & NOBLE, INC. AND SUBSIDIARIES
Non-GAAP Reconciliation & Forward-Looking Statement
(In millions)
(Unaudited)
                           
                           
        Fiscal 2017     Fiscal 2018     Forward-Looking Fiscal 2019
                           
                           
  Adjusted EBITDA (a)     $ 187       $ 145              
  Severance       (10 )    

 

(16 )            
  Asset impairments       -      

 

(135 )            
  Strategic initiatives       (5 ) (b)     (15 ) (c)          
  EBITDA     $ 172       $ (21 )            
                           
                           
  EBITDA     $ 172       $ (21 )     $ 175       $ 200  
  Depreciation and amortization       (118 )       (106 )       (100 )       (100 )
  Operating income (loss)     $ 54       $ (127 )     $ 75       $ 100  
                                           
(a) Excludes any unusual or non-recurring items.
   
(b) Including charges related to cost reduction initiatives.
   
(c) Costs associated with strategic initiatives, including strategic consulting and markdowns to clear certain non-returnable inventories.
 

 

Source: Barnes & Noble, Inc.

Media:
Barnes & Noble, Inc.
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
mkeating@bn.com
or
Investors:
Barnes & Noble, Inc.
Andy Milevoj, 212-633-3489
Vice President
Investor Relations and Corporate Finance
amilevoj@bn.com