What happened
Shares of Barnes & Noble (NYSE:BKS) were falling today after the bookstore chain turned in another disappointing earnings report. The retailer lowered its full-year forecast after underwhelming postholiday results in the key holiday quarter.
As a result, the stock was down 14.4% as of 11:23 a.m. EST.
So what
Barnes & Noble actually turned in comparable sales growth of 1.1% in the third quarter, a favorable sign but disappointing considering the company posted 4% growth during the holiday weeks between Black Friday and New Year's Day. Overall revenue was flat at $1.23 billion, which was slightly below expectations at $1.24 billion.
Gross margin edged down from 32.5% to 32.3%, and adjusted operating profit was essentially flat. Adjusted earnings per share during the seasonally strong quarter came in at $1.21, which beat estimates at $1.10, and adjusted EBITDA in the quarter fell from $139.5 million to $133 million.
Chairman Leonard Riggio sounded optimistic, saying:
In fiscal 2019, we have been focused on growing the top line, which contributed to our best holiday in years. Sales benefited from our new ad campaign, increased marketing and promotions, and an improved omni-channel experience for our customers. We believe these efforts are laying the foundation for sustained growth.
Now what
B&N lowered its full-year adjusted EBITDA outlook to $140-$155 million from a previous range of $175-$200 million, citing incremental investments and weaker-than-expected post holiday sales.
Considering the company's weak position as it tries to fend off Amazon, investors were already skeptical of Barnes & Noble's turnaround potential. The slash in EBITDA guidance only gives them more reason to worry.