Cost cutting helped Barnes & Noble Education post a profit of just under $800,000 in the third quarter ended January 26, 2019, but total quarterly revenue at the company fell more than expected, dropping 8.8%, to $550.3 million. The small profit in the most recent period is compared to a net loss of $283 million in the same period last year, a total that included about $313 million in one-time charges.
B&NE executives attributed the bigger than expected revenue decline to “the acceleration from physical textbooks to digital offerings.” That contributed to “somewhat higher than expected declines in revenue and EBITDA" at Barnes & Noble College stores, as well as its MBS textbook division.
At B&N College, sales fell 8.0%, compared to the same period in the year prior, to $461.1 million. The decline was due to a 7.7% drop in comparable store sales for the quarter because of lower textbook sales, though the company added that the spring rush had extended beyond the end of the quarter, and that same store sales showed improvement in February.
In the MBS division, revenue fell in both its wholesale and direct operations, leading to a 16.2% decline for the unit. MBS Wholesale net sales fell 16.4%, compared to the prior year period, due to lower publisher rental penetration than anticipated and lower sales of traditional wholesale textbooks. MBS direct sales decreased 15.8%, due to lower sales from higher ed accounts and net new stores.
In its small Digital Student Solutions unit, revenue fell 6.0% compared to the prior year period. B&NE said the decrease reflects lower sales at Student Brands overall, partially offset by growth in certain English and foreign language properties.
Positive developments in the quarter included growing acceptance of Bartleby, B&NE's digital study product that signed up more than 50,000 subscribers in the spring rush period. The company has a number of different ways it plans to attract more students to Bartleby. B&NE also expanded relationships with Oxford University Press, Wiley, and Macmillan Learning to expand the sale of their digital products.
Even as B&NE ramps up its digital products, it scaled back its revenue projections for the full fiscal year ending in April. For fiscal 2019, the company cut its sales outlook to a range of $2.15 billion to $2.2 billion, from $2.2 billion to $2.3 billion.