Barnes & Noble shared more bad news with investors about its third quarter performance, ended January 28. Total sales fell 8.0% compared to the third quarter of fiscal 2016, dropping to $1.3 billion.
In early January, B&N reported that holiday sales were disappointing, falling 9.1%. At the time, CEO Len Riggio said there was a slight improvement in sales immediately after the end of the holidays. In today’s report, however, B&N said "trends softened in late January and into the fourth quarter."
With the sales decline in the quarter, company net income fell 12.5% from the comparable period a year ago, to $70.3 million
With the weakening trend, B&N reduced its forecast for fiscal 2017, which ends in April. The retailer now expects full year fiscal comparable store sales to decline approximately 7%, and consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) to be in a range of $180 million to $190 million, excluding the impact of one-time charges. Fiscal 2017 EBITDA for the retail stores is now expected to be in a range of $200 million to $210 million, while Nook's EBITDA loss is projected to be approximately $20 million.
In January, B&N said it expected total EBITDA to be $200 million, with retail EBITDA forecast to be $225 million. The Nook segment is expected to post an EBITDA loss of $25 million.
Comparable store sales had been expected to finish the year down 6%.
Looking back at the third quarter, B&N reported that comparable store sales fell 8.3%, driving a 7.5% decline in revenue through its retail segment. As it did in reporting disappointing holiday sales, the company attributed the decline to lower store traffic, a drop in adult coloring book sales and record-high sales last year of Adele’s album.
A bright spot was BN.com, where sales rose 2.2% in the quarter. Nook sales fell 25.7%.
For the first nine months of fiscal 2017, revenue at the chain was down 6.5%. Net income was $35.4 million, up from $6.2 million, but last year’s earnings included a $39.4 million loss from discontinued operations.
In a conference call with analysts, B&N CEO Len Riggio said a major factor in the declining traffic is the continued obsession by the country, and the media, with the new Trump administration. He said while business picked up at the beginning of the new year, it fell again after the inauguration. B&N's comp sales in the evening are noticeably lower than in the day and are also lower in the week than on the weekend. In addition to keeping possible shoppers at home, the political coverage has limited the chances authors have to be featured on many shows and the loss of publicity has hurt sales.
Riggio said he expects Americans "will get back to their lives" at some point, but acknowledged he didn't know when that may happen.
This story has been updated to include remarks from Len Riggio.