Higher tax bill eats into Barnes & Noble's profit
Reuters
Published Mar 10, 2015 11:40AM ET
Higher tax bill eats into Barnes & Noble's profit
(Reuters) - Barnes & Noble Inc's (N:BKS) quarterly profit widely missed analysts' estimates as the bookstore chain paid more tax and invested in its college books business ahead of its planned spinoff.
Shares of Barnes & Noble, which said last month it would separate the college books business by August and list it, fell as much as 7.5 percent in morning trading on Tuesday.
The largest bookstore chain in the United States had earlier planned to spin off the growing and profitable business together with its Nook tablets and e-book business.
The company had to pay 55 percent more income tax in the third quarter ended Jan. 31, as it bought the stakes of partners Microsoft Corp (O:MSFT) and Pearson (LONDON:PSON) Education in Nook Media LLC in December.
Barnes & Noble on Tuesday said it now expects comparable sales in its college unit to remain flat in the year ending April, better than the low-single digit percentage decline forecast earlier.
Earnings before interest, taxes, depreciation and amortization at the business declined 20 percent to $28.1 million for the third quarter.
The company's net income rose 14 percent to $72.2 million, or 93 cents per share. Revenue fell nearly 2 percent to $1.96 billion.
Analysts on average had expected a profit of $1.23 per share on revenue of $1.92 billion, according to Thomson Reuters I/B/E/S.
Total comparable retail store sales slipped 1 percent, matching estimates by analysts polled by research firm Consensus Metrix.
Barnes & Noble shares were down 6.4 percent at $23.26 on the New York Stock Exchange amid heavy late morning trading.
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Written By: Reuters
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