Barnes & Noble, Inc. (BKS) Posts Mixed Q4 Results; Board Approves Separation of NOOK Media Business

Barnes & Noble, Inc. (NYSE: BKS) reported Q4 EPS of ($0.72), $0.13 worse than the analyst estimate of ($0.59). Revenue for the quarter came in at $1.32 billion versus the consensus estimate of $1.19 billion.

Comparable store sales declined 4.1% during the quarter and 5.8% for the full year. “Core” comparable store sales, which exclude sales of NOOK products, decreased 1.9% for the fourth quarter, which included unusually severe February weather. Excluding February, fourth quarter Core comparable store sales decreased 0.5%, in-line with previously reported third quarter results. Core comparable store sales declined 3.1% for the full year. Sales for both the quarter and the year were also impacted by store closures and lower online sales.

Board Authorization For NOOK Media Separation

With the objective of optimizing shareholder value, the Company’s Board of Directors has authorized management of the Company to take steps to separate the Barnes & Noble Retail and NOOK Media businesses into two separate public companies. The Company’s objective is to take the steps necessary to complete the separation by the end of the first quarter of next calendar year.

“In fiscal 2014 we have taken certain actions to strengthen the Company, including the ongoing rationalization of the NOOK® business, growing the College business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve Retail’s sales trends,” said Michael P. Huseby, Chief Executive Officer of Barnes & Noble. “Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions. We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation.”

The Company has engaged Guggenheim Securities, LLC as financial advisors and Cravath, Swaine & Moore LLP as legal counsel.

The Company notes that there can be no assurances regarding the ultimate timing of the proposed separation or that such separation will be completed. Any separation of NOOK Media and Barnes & Noble Retail into two separate public companies will be subject to customary regulatory approvals, securing any necessary financing, tax considerations, final approval of the Barnes & Noble Board of Directors and other customary matters and is dependent on numerous factors that include the macroeconomic environment, credit markets and equity markets.

Outlook

For fiscal year 2015, the Company expects both Retail comparable bookstore sales and Core comparable bookstore sales to decline in the low-single digits. College comparable store sales are also expected to decline in the low-single digits. The Company expects to continue to decrease EBITDA losses in the NOOK segment.

For earnings history and earnings-related data on Barnes & Noble, Inc. (BKS) click here.

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