B&N Reports; Plans to Split Retail and Nook

In the fourth quarter ended May 3, consolidated revenue at Barnes & Noble rose 3.5%, to $1.3 billion, and the net loss was $36.7 million compared to a net loss of $114.8 million in the same period a year earlier. For the full year, consolidated revenue dropped 6.7%, to $6.4 billion, and the net loss was $47.3 million compared to a net loss of $157.8 million the previous year.

In major news, B&N's board approved the division of B&N Retail and Nook Media into two separate public companies, which it aims to complete early next year. B&N has hired Guggenheim Securities as financial advisers and Cravath, Swaine & Moore as legal counsel for the transaction.

B&N Retail revenues in the quarter rose 0.8%, to $956 million, and for the year fell 6%, to $4.3 billion. (Adding a 53rd week of results added $57 million in extra sales. Sales for both the quarter and the year were also impacted by store closures and lower online sales.) Sales at stores open at least a year fell 4.1% in the quarter and 5.8% for the year. "Core" comparable store sales, i.e., excluding Nook sales, fell 1.9% in the quarter and 3.1% for the year.  

College division revenue in the quarter rose 18.2%, to $298 million, and for the year fell 0.9%, to $1.7 billion. (The additional 53rd week of results added $15 million in extra sales. Fourth-quarter results were also positively affected by the beginning of the semester rush.) Sales at College stores open at least a year fell 2.7% because of "a higher mix of lower priced used textbook rentals and lower textbook volume," the company said.

Nook revenue in the quarter fell 22.3%, to $87 million, and for the full year fell 35.2%, to $506 million. Device and accessories sales in the quarter fell 30.1%, to $25 million, and for the year fell 44.8%, to $260 million. Digital content sales in the quarter fell 18.7%, to $62 million, and for the year fell 20.6%, to $246 million, "due primarily to lower device unit sales."

B&N CEO Michael P. Huseby commented: "In fiscal 2014 we have taken certain actions to strengthen the company, including the ongoing rationalization of the Nook business, growing the College business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve retail's sales trends. Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions. We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of Nook Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and Nook Media businesses will continue to have long-term, successful business relationships with each other after separation."

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