Barnes & Noble Education Inc. (BNED, Financial) reported its earnings for the second quarter of fiscal 2017 today. While the company reported an increase in sales, it lowered the outlook for comparable sales for the year.
The company is one of the largest contract bookstore operators on university campuses across the U.S. and a leading provider of digital education services. In August of 2015, the company split from Barnes & Noble Inc. (BKS, Financial) and began operations as an independent company.
Sales for the quarter of $770.7 million increased 2% from the same quarter a year ago and year-to-date sales of $1.009 billion increased 1.5% from the prior year. Management attributes the growth to the opening of 34 new stores, raising the total store count to 771 locations.
Overall, the company reported a profit of $29.3 million, or 63 cents per share, for the quarter. This is down from $33.4 million, or 69 cents per share, a year earlier.
For the quarter and the year, comparable-store sales decreased 2.9% however. CEO Max Roberts attributed the decrease to lower enrollment and a softer retail environment and discussed the company’s strategy to combat declining sales, which includes a price matching program.
"Since we experienced lower textbook and general merchandise sales on our campuses, we are continuing the rollout 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,” Roberts said.
The New Jersey-based company also announced the launch of its digital education courseware platform earlier this year. The platform allows colleges and universities to utilize OER textbooks and classroom resources. OER (open education resource) is the term used to refer to open-licensed curriculum. The platform was developed by LoudCloud, an educational technology company acquired by B&N Education in March. The program is expected to be available for colleges and universities in the spring of 2017.
The company reported comparable sales for the year are expected to decline 2% to 3% compared to last year. In contrast, total sales are expected to grow 3% to 4%.
The disappointing results caused shares to drop 17% to $9.60 during early trading. It closed at $11.59 Monday.
David Abrams (Trades, Portfolio) is the company’s largest shareholder among the gurus. He holds 19.04% of outstanding shares, which represents 4.2% of his total assets managed. Chuck Royce (Trades, Portfolio), Jim Simons (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Michael Price (Trades, Portfolio) also hold positions.
Disclosure: I do not own stock in any companies mentioned in the article.
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