Barnes & Noble shares crater as loss widens

Sep 9, 2015 04:41 PM ET

Bloomberg News/Landov

Barnes & Noble Inc. stock closed down a startling 27.7% on Wednesday, after the company posted a loss at its core books business and the education unit that was spun out as a separate listed company after the quarter end.

Shares ended the day at $11.80, their lowest level since.May 23, 2014. It was their second-biggest point and percentage decline, after a steep selloff on Nov. 8, 2001.

The company reported a loss of $34.9 million, or 68 cents a share, for the quarter, versus a loss of $28.5 million, or 56 cents a share, for the same period last year. Revenue declined 1.5% to $1.22 billion. The FactSet consensus was for earnings of 20 cents a share and revenue of $1.2 billion.

See also: Barnes & Noble loss widens as sales dip

Despite an array of changes at Barnes & Noble   aimed at restoring the ailing company to profitability, executives say books are still the cornerstone of their business.

Over the past few months, the company announced the plan to split Barnes & Noble’s retail and education businesses, unveiled new leadership under Chief Executive Robert Boire, and a new version of its tablet, the Samsung Galaxy Tab S2 Nook, among other things. Boire opened the earnings conference call by reminding listeners that it was only his second day on the job.

There were some bright spots in the earnings. Same-store sales for the retail business grew 1.1% for the quarter. And books like Harper Lee’s “Go Set a Watchman” and E.L. James’ “Grey” were fan events, with “Watchman” setting a company record for first-day sales.

“Books are the soul of Barnes & Noble,” said Boire. “They’re what defines us, what defines our customer base and our culture.”

There was mention of future third-party arrangements to drive content distribution on the Nook, but that is yet to come.

Toys and games grew 17.5%, but despite the strong showing, Boire said they are a “small part of the business” and that the company is always “looking for things that complement (the) book business.”

“Bookstores are particularly adept at driving discovery,” said Chief Operating Officer Jaime Carey. “We’re focused on improving that shopping experience.”

The company is considering a new store prototype which could also aid in that area.

There was more lackluster news at Barnes & Noble Education Inc. which was spun off on Aug. 3. The company reported a loss of $26.9 million, or 65 cents a share, on a carve-out basis, after a loss of $26.2 million, or 71 cents a share, in the year-earlier period. Sales rose 5.9% to $239 million, while same-store sales were up 1.8%. That stock closed Wednesday down 2.3% to $12.95.

Barnes & Noble Education is also about bookselling, but is striving to be a campus hub for socializing and a place for other items, such as dorm room necessities, food and drinks and clothing.

“We’re focused on the university mission,” said Chief Executive Max Roberts. “The design of the stores are unique, they celebrate the campus and the purpose of the university.”

Barnes & Noble Education has 736 stores on campuses nationwide.