Barnes & Noble Inc. (NYSE: BKS) today reported sales and
earnings for its fiscal 2013 second quarter ended October 27, 2012.
Second quarter consolidated revenues were $1.9 billion, a decrease of
0.4% as compared to the prior year. Second quarter consolidated earnings
before interest, taxes, depreciation and amortization (EBITDA) increased
16% as compared to a year ago to $65 million. Consolidated second
quarter net earnings attributable to Barnes & Noble were $2 million, as
compared to a loss of $7 million in the prior year. Second quarter net
losses attributable to Barnes & Noble were $0.04 per share, which
includes the impact of the dividend on redeemable preferred shares, as
compared to a loss of $0.17 per share a year ago.
"In addition to growing our EBITDA 16% during the quarter, the company
also completed the formation of our promising NOOK Media subsidiary and
closed our investment from Microsoft," said William Lynch, Chief
Executive Officer of Barnes & Noble. "We expect our two highly acclaimed
new NOOK products, and our Microsoft partnership on Windows 8 to further
fuel the growth of our digital business, and are encouraged by the
promising start to the holidays in our retail and digital businesses."
Retail
The Retail segment, which consists of the Barnes & Noble bookstores and
BN.com businesses, had revenues of $996 million for the quarter,
decreasing approximately 3% over the prior year due to flat comparable
store sales, store closures and lower BN.com sales. During the quarter,
the company began to cycle against the favorable impact of the Borders
liquidation a year ago. Core comparable bookstore sales, which exclude
sales of NOOK products, increased 1.8% for the quarter as compared to
the prior year.
Retail earnings before interest, taxes, depreciation and amortization
(EBITDA) increased from $14 million to $28 million during the second
quarter, a 101% increase, led by a higher mix of higher margin core
products. In addition, the quarter also included the reversal of $4.7
million of accrued legal costs recorded in fiscal 2012, resulting from
the final settlement of the litigation related to the company's 2009
acquisition of Barnes & Noble College.
College
The College segment, which consists of the Barnes & Noble College
bookstores business, had revenues of $773 million, increasing 0.4% as
compared to a year ago, led by new store growth. Comparable College
store sales decreased 0.5% for the quarter, as compared to the prior
year period. College comparable store sales reflect the retail selling
price of a new or used textbook when rented, rather than solely the
rental fee received and amortized over the rental period.
College EBITDA decreased $5 million during the quarter as compared to a
year ago to $88 million, resulting from a higher revenue deferral on
increased textbook rental volumes and continued investments in digital
education.
NOOK
The NOOK segment, which consists of the company's digital business
(including Readers, digital content and accessories), had revenues of
$160 million for the quarter, increasing 6% as compared to a year ago.
Digital content sales increased 38% for the second quarter over the
second quarter in the prior year. Digital content sales are defined to
include digital books, digital newsstand, and the apps business. The two
new NOOK devices, NOOK HD and NOOK HD+, began shipping after the close
of the company's fiscal second quarter, and sales from the launch of
those products will be reflected in the current fiscal third quarter and
subsequent quarters.
NOOK EBITDA losses were essentially flat, increasing by 1% over the
prior year to $51.4 million, as margin improvements were offset by
higher investments primarily in product development and international
expansion.
Holiday Results to Date
NOOK unit sales doubled over the four-day Black Friday weekend, across
all channels, based on information provided by our channel partners on a
sell-through basis compared to the similar period last year. The growth
was driven by increased promotional activity at channel partners,
particularly Walmart and Target. Retail Core comparable sales, which
exclude sales of NOOK products, slightly declined over the holiday
weekend, in-line with company expectations.
Barnes & Noble, Inc. will report holiday sales on or about Jan. 3,
2013.
