Back To School For Barnes & Noble?
Estimize | Jun 24, 2015 12:21PM ET
Before the market opens this Thursday, Barnes & Noble (NYSE:BKS) will report its FQ4’15 earnings, heading into its traditionally weakest fiscal quarter of the year. The Estimize EPS consensus of -$.39 is nearly in line with the Wall Street EPS consensus of -$.37. Similarly for revenue, the Estimize consensus is set at $1.169 billion with the Street number coming in at $1.161 billion. The Estimize consensus numbers for EPS and revenue would put Barnes & Noble’s year-over-year earnings growth at 48% and its revenue growth at -13.5%.
As a major player in the retail book market, Barnes & Noble has struggled with increasing revenue from its retail segment. Instead, rising sales from its college segment have skyrocketed, increasing by nearly 109% since Barnes & Noble filed its financial reports at the end of the 2010 fiscal year. The company will look to split its business and spin off its college bookstore business sometime in the upcoming calendar year under the name of Barnes & Noble Education, as registered with the SEC earlier this year. Two independent directors, one for the retail business and one for the college-bookstore business, were also appointed late last week.
The company has seen decreasing revenues from its sale of the Nook since 2012, facing fierce competition from Amazon.com (NASDAQ:AMZN) both in the form of its Kindle as well as its online marketplace for books. Year-to-date, the stock has struggled to outperform the Russell 2000 beating the index by only 7%, and the stock’s returns have paled in comparison to Amazon’s returns. The chart below shows the year-to-date price returns of Barnes & Noble, Amazon and the Russell 2000.
Barnes & Noble’s timely decision to divide its business could drive the company into a better financial standing. While a decrease in revenue would push the company further away from success, it appears that the company may be able to salvage its losses in its college sales. Investors will pay close attention to the company’s income statement as they look for signs of growth in the college division of Barnes & Noble.
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