Barnes & Noble’s sales fell 6.9% in the quarter ended July 28, compared to the period ended July 29, 2017. The operating loss in the quarter was $16.2 million, up from $15.2 million a year ago.
B&N reported that the decline in earnings was due to the lower sales, partially offset by $22 million in expense reductions.
Comparable store sales dropped 6.1% for the quarter, which is the first period in B&N’s new fiscal year. The company reported that sales trends in the quarter improved every month in the quarter: same store sales in May were down 7.8% compared to May 2017, fell 6.1% in June compared to 2017, and declined 4.5% in July. In August, comp store sales were down only 0.8%, B&N reported.
In a statement, B&N chairman Len Riggio thanked “our team of merchants and the entire store management group from top to bottom” for improving the monthly sales trend. He added that the company “fully realize[s] that cutting expenses does not alone provide a path to the long term viability of any retail business. Therefore, our short and long term focus is to grow our top line, and, by doing so, provide us the cash flow needed to grow our business.”
Comparable sales of books were down 7% in the quarter compared to the quarter a year ago while non-book comps were off 3%. Riggio attributed the weak book comps to glitches in the roll out out of its new order online-pickup in store program, noting that book comps improved as the quarter rolled on.
Riggio is overseeing the three-person management team that is currently running the retailer since its former CEO, Demos Parneros,, was fired in early July. Riggio said B&N will take up the search for a new CEO in earnest at its October 3 board meeting, adding that even before a formal search has begun "there has been no shortage of candidates applying for the job."
Riggio took a few minutes during the conference call with analysts to challenge the allegations made by Parneros in his recently filed lawsuit seeking severance. Riggio called the suit "a smokescreen" to extort money from the company and reiterated Parneros was fired because of sexual harassment issues and bullying. He said the board of directors and well as himself personally have great faith in the management team including CFO Allen Lindstrom who came under attack in the Parneros lawsuit.
Sales in B&N’s retail segment fell 6.6% in the quarter, to $775.7 million, while revenue in the Nook category dropped 14.3%, to $25.3 million.
Looking at fiscal 2019, which will end April 30, 2019, B&N stuck to its original guidance that EBITDA (earnings before interest, taxes, depreciation, and amortization) to be in a range of $175 million to $200 million. In the first quarter EBITDA was $7.7 million, down from $11.2 million a year ago.
The company plans to open four new stores in the second quarter, three of which will be relocated outlets. B&N will be store positive for fiscal 2019,