Barnes & Noble announced results for their new fiscal quarter, aligned to dovetail with the just-acquired BN College. Reporting sales for the past nine weeks of the new quarter, same-store sales at BN fell 4.1 percent at $665 million, while results at BN.com rose 8 percent to $91 million. The retailer said that for the full fiscal 2010 quarter, they expect that comp-store sales decline to range between 1 percent and 3 percent–meaning they see sales improving from here.
Of course those forward-looking comparisons are set against a lower bar–October is when book sales started to plunge last year as the economy froze, with BN reporting a 7.4 percent comp-store decline in late November. CFO Joe Lombardi confirmed in this morning’s conference call with investors that “most of the acceleration we’re projecting was against the double-digit declne in October last year.”
At BN College, coming off of the back-to-school season, same-store sales fell 0.7 percent, while the overall sales number rose at $770 million. Sales of new textbooks were up “mid-single-digits,” while used book sales had “some decline” and the biggest drops were in general merchandise, due to the economy. In the presentation, BN disclosed that the 5 percent of the College unit’s annual sales are trade books. The company also disclosed that it will take a series of annual charges over several years, “amortizing the value we are ascribing to the contract relationships that College has” to run bookstores on behalf of institutions. In the first year that charge is expected to comprise 33 cents a share. At the time the merger deal was closed, BN College had about $20 million more in cash on hand than was originally expected.
Barnes & Noble told investors to expect low 2010 GAAP earnings per share of between $0.59 to $0.89. They say the range is low because the period will “not reflect the full benefit of College’s annual earnings, but will include higher interest expense, one-time transaction costs, and purchase accounting adjustments related to the acquisition.” BN College is a highly-seasonal business, with all of the profits coming during the two school-year quarters.
As Wall Street took in the new results this morning, shares were down over 7 percent in early trading.