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A Performance Recap: Barnes & Noble In 2013

Updated on February 19, 2014

Barnes & Noble is the largest bookstore brand in the United States accounting for about 675 stores and 686 college bookstores distributed across the country. It is traded in the New York Stock Exchange as BKS and is part of the S&P Fortune 500 companies. In the start of the year, it will be imperative to take a look at how Barnes & Noble performed in 2013 and examine Barnes & Noble stock analysis. This way, investors will be able to determine whether it is a good idea to invest in the company or not.

Introduction

For the fourth quarter of the year 2013, the BKS stock price had a decrease in revenue by 7.4%. This percentage is equivalent to $1.3 billion revenue. The EBITDA (Earnings before interest, taxes, depreciation and amortization) is a loss. The EBITDA of BKS estimates in the 2013 is $122.0 million, which is another bad news for the company as it only has $9.7 million loss in 2012. According to BKS stock news, in the fourth quarter of 2013, the consolidated loss of the company is $118.6 million, which is a bigger loss compared to the prior year $56.9 million. In 2012, the net loss per share is $1.06 and in 2013, it is $2.11 per share. This data is only for the fourth quarter of 2013.

A quick overview

For the whole fiscal year of 2013, the Barnes & Noble stock has underperformed. The total loss in revenue is 4.1%, which is equivalent to $6.8 billion. On the other hand, the EBITDA for the whole fiscal year of 2013 is $10.3 million which is lesser compared to the prior year’s EBITDA $176.7 million. The net loss is bigger compared to the 2012. In 2013, according to Barnes & Noble stock news, the company lost $2.97 per share or $154.8 million, while in the 2012 the company lost $1.35 per share or $65.6 million.

When it comes to operational cash and debt, the situation is not any better. The company had borrowed $77 million of its $1 billion credit limit of its Barnes & Noble stock price. This is smaller compared to the debt of the company in the prior year which is only $270 million. The cash on hand of the company is $160.5 million.

Retail

The retail division of BKS stock is primarily made of its bookstores and website, BN.com. This division made BKS earnings of $948 million for the fourth quarter alone, but $4.6 billion for the whole year. Though this figure is impressive, it is lower compared to the prior year’s total revenue. This means that the retail division of Barnes & Noble had a 10.0% decrease in the fourth quarter and 5.9% decrease for the whole fiscal year. The loss is attributed to some of the stores being closed and lower responses through the company’s website. According to BKS stock analysis, the Nook is also in bad shape leading to additional retail loss. The fourth quarter is also lower compared to the prior year because in the fourth quarter of 2012, the store made a good comeback with the sales made through popular books such as the Hunger Games and Fifty Shades of Grey. In addition to this, based on Barnes & Noble stock news, the retail division’s EBITDA is lowered to 23.9%. The EBITDA for the fourth quarter of year 2013 is $51 million while $67 million in 2012. For the whole fiscal year, the EBITDA has increased by 16%, which is equivalent to $374 million. The EBITDA was better for the year 2013 because of the higher sales of various Barnes & Noble stock aside from books and cost cutting.

College

In addition to the retail division, BKS also have bookstores mainly dedicated for colleges. This division made a good portion of the overall income of the company. In the fourth quarter of 2013, the college bookstore division acquired $252 million of BKS earnings, while $1.8 billion for the whole fiscal year. A good portion of the fourth quarter revenue was positively affected by school rush at the beginning of the quarter. This is a positive development in terms of Barnes & Noble stock price since when one compares the fourth quarter performance of the college bookstore division during the prior year, Barnes & Noble made an increase in sales. The college bookstore had 7.5% revenue increase for the fourth quarter. However, the fourth quarter of 2013 is the only good news that BKS stock can smile about. For the whole fiscal year, the college bookstore division had 1.2% decrease in revenue and BKS estimates.

EBITDA of College bookstore division

The EBITDA of the fourth quarter of college bookstore made some improvement based on BKS stock analysis. Because of the higher revenue during the fourth quarter, the EBITDA reached $3.8 million. However, as expected, the fourth quarter performance made little difference for the whole fiscal year. The EBITDA declined by 3.9%, which is equivalent to $111.5 million. Since Barnes & Noble made a significant investment on its college division, the EBITDA further increased. In addition to this, the operational cost of the college bookstore division significantly went up due to addition of new college bookstores and digital education improvement.

Nook

Nook has been one of the most recent products of the Company as seen in some Barnes & Noble stock news. The Nook is part of the attempt of the company to take on the digital business and not just settle to traditional brick and mortar stores, thereby improving BKS stock price performance. Starting in the early 1990s, the Internet begun to influence readers’ influence. With the additional technological innovation, people started to read books through mobile devices such as tablet. Moreover, according to BKS stock news, the Internet opened the possibility that consumers can buy books and other materials by just shopping online. Because of the convenience that the Internet offered to the consumers, people have slowly migrated from offline stores to the online stores. This resulted to the decreased revenue of bookstores. Thankfully, Barnes & Noble stock price is strong enough to withstand the test of time. However, from the 90s, there had been many American bookstores that went bankrupt because of the tough competition. In the 2011, Borders, the strongest competitor of Barnes & Noble, was forced to shut down, leaving Barnes & Noble as the sole national bookstore retailer chain and the biggest Barnes & Noble stock in the United States.

Nook: Barnes & Noble’s coping mechanism

As mentioned in Barnes & Noble stock analysis, the Nook symbolizes the attempt of Barnes & Noble to take on the digital world. This could be the last hope of Barnes & Noble to regain its status as the primary source of books and materials for the whole United States.

In the initial year, Nook made a good sale record and BKS stock price. But as time passes by, Nook started to fade into the sideline of the world of E-paper readers. This is primarily because of the fierce competition that the Nook’s BKS estimates have to take on.

Prior to the introduction of Nook, the market has been saturated by different e-readers based on Barnes & Noble stock news. This includes the two most popular devices today, the Amazon’s Kindle and Apple’s iPad. In addition to this, there are also other e-reader device brands as well, including Samsung, Sony reader, Kobo, and others.

The fierce competition surrounding the Nook

The introduction of Nook is a good move for the company, based on a Barnes & Noble stock analysis. However, there are just many things that the competitors have to offer that Nook can’t offer. For starters, the Nook is chiefly made for the US market only. BKS do not offer shipment of the Nook outside of United States. So if the buyer is from the Canada, UK, Australia, or any other country outside of US, they would not be able to register their Nook easily. Some Nook users would even attempt to register its device by using fake US address.

Furthermore, Barnes & Noble does not have enough money to fund the advertisement and promotion of Nook. This has led to poor sales and even great losses that forced Barnes & Noble to stop its in-house production of the Nook. It is very important to note as this point that the Nook caused Barnes & Noble to loss $300 for the year 2012 and $500 million for the year 2013, according to one BKS stock analysis.

Nook performance

For the fourth quarter, the Nook division made BKS earnings of $108 million revenue. For the whole fiscal year, the Nook made $778 million from its Barnes & Noble stock price. If one tries to compare 2011 and 2013 Nook performance, it can easily be concluded that Nook did not make an impressive run. In the fourth quarter of 2013, it has lost 34% of revenue compared to 2012, while 16.8% for the full year. BKS stock expected that it will gain a strong sale during the holidays of fourth quarter. However, this never happened as there is a decrease of 8.9%. As this might be the case, it is understandable because in 2012’s fourth quarter, the Hunger Games and Fifty Shades of Grey boosted the sales and BKS estimates. If only popular books would have been out for the fourth quarter, the result might have been identical or even better.

Partnership to be made for Nook production

There is a plan announced by the company to alleviate the Nook losses. As a matter of fact, in every Nook being sold, the loss is greater than the gain. Thus, Barnes & Noble stock would like to decrease the manufacturing expenses. It is also the intention of the company to move forward in partnership with other companies. It is no secret that Nook is losing more than it should be. It is bleeding Barnes & Noble financially and the company should do something about it before it is too late.

Consumers should not be worried about the announcement that Barnes & Noble will entirely drop off its Nook or the Nook’s BKS stock price may be affected. There will only be some changes on how it will be manufactured. The company will continue to produce thousands of eBooks and brand new fascinating Nook Apps. According to BKS stock news, the Nook’s popular line of devices such as Simple Touch, Glowlight, Nook HD, and Nook HD+ will continue to dominate the Nook division. As of the time of this writing, Barnes & Noble has not revealed yet who these third-party companies might be. Though the company will transfer the production of colored Nook devices, it will retain the production of black and white Nook.

Better days for Barnes & Noble

The continued losses of Nook have led to change of plan and strategy. Thus, Barnes & Noble aims to improve the Nook division by its partner-centric model and strategies. The change in plan has immediately made a positive impact to the overall performance of Nook. For example, the Nook expenses went down to $26 million or 36% decrease. This is a good development that the company warmly welcomes.

On the other hand, the Nook EBITDA is still in bad shape leading to $177 million in just the fourth quarter as one examines Barnes & Noble stock analysis. The bulk of the EBITDA is attributed to the inventory charges. For the whole fiscal year, the Nooks EBITDA losses peaked to $475 million.

Conclusion

As stated in BKS stock news, the whole 2013 has been a rocky road for the country’s largest bookstore chain. Though it is a discouraging trend as the problem is just the peak of the iceberg, there are still some good news ahead for BKS. According to BKS stock analysis, the decision to let other companies handle the manufacturing of Nook is a wise decision. This is a good step for the company as it can unload some burden without completely leaving the digital business, thereby partly freeing BKS from the Nook. Furthermore, BKS stock will now have increased amount of energy and resources to take care of its other divisions. It should be noted that Barnes & Noble is still the largest retail store of its kind. This is something that it can capitalize on and use as a stepping stone to reach greater height and BKS earnings.

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