Barnes & Noble Inc. (BKS, Financial) traded 7% lower at market open on June 21 as the company said comparable sales declined 5.4% during the 12 months ending April 28 compared to the prior year.
For the fiscal fourth quarter, the New York-based bookseller reported net losses of $21.1 million, or 29 cents per share, compared to net losses of $13.4 million, or 19 cents per share. Full-year adjusted earnings before interest, taxes, depreciation and amortization of $145.4 million declined approximately $42 million from the prior year.
Company attempts turnaround for fiscal 2019
CEO Demos Parneros said the company “developed a long-term strategic turnaround plan” during the year. Parneros highlighted several key initiatives on the call, including increasing customer engagement, improving store conversion rates and expanding omnichannel capabilities. One key initiative is the Barnes & Noble Book Club, where readers and authors can share ideas about a specific book and promote it to other consumers. Parneros also discussed improvements to the company’s membership program as members offer higher profitability potential than non-members, according to management.
Company has low profitability and growth potential
The company expects full-year adjusted EBITDA between $175 million and $200 million for the upcoming fiscal year. Despite this, management warned that turnarounds can take time and that achieving the goals for fiscal 2019 requires “higher capital expenditures and other management incentives.”
GuruFocus ranks Barnes & Noble’s profitability 3 out of 10 as the company’s margins and returns underperform over 86% of global competitors. The company has several red flags, including operating losses, declining revenues and increasing long-term debt.
Although the company pared back some of its losses, Barnes & Noble still traded 4.65% lower from its previous close at noon.
Disclosure: No positions.
