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On Friday, Bloomberg Dividend Forecast said it expects Barnes & Noble (NYSE: BKS) to cut its payout in half this week, to $0.075. It’s an unsurprising forecast given B&N’s (and let’s be honest, just about everyone else’s) continuing struggle to hold ground against the online purchasing revolution (AKA, Amazon.com) that has made nearly all forms of media almost instantly accessible at bargain prices.
B&N Education segment falls short of expectations
At the end of August, stocks of Barnes & Noble Education (NYSE: BNED) fell 17.7% to $5.61 as the company released its Q1 2018 financial results, which included a consolidated net loss of $34.8 million and a reported 2.5% decrease in B&N college comparable store sales.
It would seem that confidence in the company’s abilities to stay relevant in an age of textbook rentals and online resale is dropping, in spite of B&N’s every effort and results: according to the Q1 report, B&N’s education segment reported revenue of $355.7 million, up 48.7% from the previous year’s Q1 numbers (but short of the predicted $406.22 million). In addition, the company wrapped up its acquisition of Student Brands LLC, a leading direct-to-student subscription-based writing skills services business, in August for $58.5 million.
“Student Brands is expected to contribute more than $10 million of EBITDA to [B&N Education]’s consolidated results over the next twelve months and significantly expands the company’s opportunity to market the services students need to improve performance in the classroom and to secure jobs after graduation,” said B&N in its Q1 report.
B&N College Booksellers has partnered with Target to promote Target’s college essentials products, aiming to expand customers in B&N’s nearly 800 college stores throughout the U.S., and opened 24 new physical stores in Q1 with total annual sales estimated at $49 million. B&N also acquired MBS Textbook Exchange in February. It seems like B&N is doing all it can to maintain what has been a core customer base (i.e., college students) for the company.
B&N Education 2018 outlook
For all its expansions and acquisitions and partnerships, B&N said in its Q1 report that “for fiscal year 2018, the company expects sales at [B&N College Booksellers] to be relatively flat, while [B&N College Booksellers] comparable store sales are projected to decline in the low- to mid-single digit percentage point range year over year.” Not an optimistic statement for a company that seems to be doing its level best to get involved in every potential education-related avenue available.