Barnes & Noble Q4 Loss Narrows, Approves Retail, Nook Separation

(RTTNews) - Bookstore chain Barnes & Noble, Inc. (BKS) reported Wednesday a loss for the fourth quarter that sharply narrowed from last year, reflecting improved margins, a sales growth, and a tax benefit.

However, adjusted loss per share came in wider than analysts' expectations, while quarterly revenues also topped their estimates. The company also provided segment sales guidance for full-year 2015.

Additionally, the company announced that its board of directors have authorized to separate the Barnes & Noble Retail and NOOK Media businesses into two separate public companies in order to optimize shareholder value. The board expects to complete the separation by the end of the first calender quarter of 2015. In August 2013, it had shelved the idea to spin off NOOK.

Earlier in the month, Barnes & Noble inked a deal with a subsidiary of South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF, SSNNF) to develop co-branded Samsung Galaxy Tab 4 NOOK tablets that feature Barnes & Noble digital reading experience.

The 7-inch version of the tablet is expected to be launched in the U.S. in early August. It will be prominently displayed along with NOOK eReaders and sold at Barnes & Noble's nearly 700 bookstores across the U.S. and online at bn.com, one of the leading e-commerce sites.

The device will combine Samsung Galaxy Tab 4 hardware with customized NOOK software to give customers powerful, full-featured tablets that are designed for reading, with easy access to Barnes & Noble's expansive digital collection of more than three million books, leading magazines and newspapers.

"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," CEO Michael Huseby said in a statement.

The New York-based company posted a net loss of $36.70 million or $0.72 per share for the fourth quarter, narrower than $114.80 million or $2.04 per share in the year-ago quarter.

On average, four analysts polled by Thomson Reuters expected the company to report a loss of $0.59 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter increased 3.5 percent to $1.32 billion from $1.28 billion in the same quarter last year, and topped four Wall Street analysts' consensus estimate of $1.19 billion.

Barnes & Noble retail store sales, which consists of the Barnes & Noble bookstores and BN.com businesses, edged up 0.8 percent to $956 million, while comparable store sales declined 4.1 percent. Excluding sales of NOOK products, core comparable bookstore sales decreased only 1.9 percent.

Barnes & Noble College sales grew 18.2 percent to $298 million, and comparable store sales increased 2.6 percent.

The company's NOOK segment, which includes devices, digital content and accessories, reported a 22.3 percent revenue drop to $87 million from last year. Device and accessories sales decreased 30.1 percent, and digital content sales were down 18.7 percent from last year.

Gross profit margin for the quarter nearly doubled to 32.1 percent from last year's 18.9 percent. The company noted that it recorded a $12.5 million tax benefit in the quarter, driven primarily by the utilization of previously reserved deferred tax assets.

Looking ahead to fiscal 2015, Barnes & Noble 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.

In Wednesday's regular trading session, BKS is currently trading at $22.51, up $1.95 or 9.48% on a volume of 1.62 million shares. In the past 52-week period, the stock has been trading in a range of $12.59 to $22.41.