Barnes and Noble has had a turbulent 12 months. The bookseller lost its new CEO, Ronald Boire, this year and saw its stock price slashed in half to $11.45. So analysts believe that its second fiscal quarter earnings report, which will be released on the morning of Nov. 22, will reveal that the bookstore chain is poised to continue its decline.
Barnes and Noble stock price
EARNINGS FORECAST: Barnes and Noble is expected to have a slight drop in its second quarter adjusted earnings per share from last year’s second quarter. The consensus estimate from Bloomberg analysts is a fall of 39 cents per adjusted share, a 3 cent larger fall than the same period last year.
SALES FORECAST: Bloomberg analysts also predict a $50 million year-over-year decrease in Barnes and Noble’s sales to $895 million.
WHAT TO WATCH:
The Election Distraction: One thing to look for when Barnes and Noble releases its earnings is any mention of weak consumer demand caused by the election. Other retailers have reported that they have seen a decline in consumer spending due to concern and focus on the presidential election. If this distraction effect is cited in the earnings report, it might be an artificial drag on Barnes and Noble’s sales that won’t repeat itself in non-presidential election years. But if sales fall the way most analysts expect, the drop can be chalked up to the same struggles that have persisted in Barnes and Noble’s previous earnings and not the election. Still, keep this in mind.
Nook Sales: The Barnes and Noble e-reader, Nook, at first seemed like a money maker when it was first released but in the past few years its sales have fallen quickly. Nook sales in the first quarter of this year fell to $41 million, a decline of 24.5 percent in the quarter. If Nook sales continue to fall Barnes and Noble’s only hope to save its e-reader business could be its new, low-cost Nook. The $50 Nook will now be able to evenly compete on price with Amazon’s e-reader Fire heading into the holiday shopping season.
Buybacks: On one final note, when looking at earnings per share, keep in mind that Barnes and Noble has instituted a buyback program and that could help lift its EPS despite potential sagging sales.