Barnes & Noble Education reported second quarter sales on Tuesday morning, with persistent same-store sales weakness carrying over from the first quarter. The company blamed the “lower textbook and general merchandise sales” on “lower enrollments and a softer retail environment.” As a result, full-year expectations for EBITDA growth have been reduced to “mid-single digits” (from a prediction of a 12 percent increase a quarter ago) and same-store sales are now expected to decline 2 percent to 3 percent (previously put at flat to down 2 percent). After rising with the broader market since early November, BNED shares were down over 16 percent in early trading, or close to $2 a share, before regaining a little, giving up most of the post-election gains as investors were reminded of the chain’s disappointing trajectory.
True to the pattern we have identified before, BNED keeps adding new stores — but selling less from those stores. Sales of $771 million were up $15 million from a year ago, even with 34 more stores, while net income of $29.3 million was down $4.1 million. Most of those new stores came online in the first quarter; only one new store opened this quarter, and they expect to open two more stores in the second half of the fiscal year. Same-store sales fell 2.9 percent in the quarter, with textbook comps down 3.3 percent.
CEO Max Roberts suggests in the release that their price-matching program is designed to stem the sales decline — acknowledging by implication that Amazon continues to make inroads into their business with discounts, as the etailer aggressively expands their campus pick-up locations. Roberts says, “We are continuing the roll out of our price matching program and adjusting our promotional strategy in a targeted and disciplined manner to reflect current market conditions, and are continuing our cost management initiatives across the company.”