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Barnes & Noble Education stock slides 30% after earnings miss, guidance cut

Barnes & Noble Education’s (NYSE:BNED) lagging legacy business weighed heavily on earnings, sending shares spiraling on Tuesday.

The New Jersey-based bookstore operator posted $0.42 in earnings per share for its fiscal second quarter on a surprise decline in sales to $617.09M. Analysts had anticipated $0.77 and $675.01M, respectively. The results came despite the buildout of First Day Complete and First Day by course material delivery offerings.

“Our second quarter consolidated financial performance fell short of our expectations, as declines in legacy course material sales and gross profits more than offset the gains generated by First Day Complete during the period,” CEO Michael P. Huseby commented. “Given the predictability of First Day Complete and its clear benefits to student outcomes, faculty instruction, and the colleges and universities we serve, we are implementing significant strategic actions to accelerate the adoption and growth of the First Day Complete model.”

Included in the strategic actions are “significant cost reduction initiatives” that management indicated are underway. A total of $30M to $35M of annualized cost savings is expected upon full implementation. Those savings are expected to be funneled into investments in the aforementioned First Day business.

However, improvement is not expected immediately as the company intends to recognize restructuring charges of approximately $5M to $6M in Q3. As such, for the full fiscal year 2023, the company anticipates adjusted EBITDA to be between $20M and $30M, down from $30M to $40M in previous forecasts and below the $33.2M analyst consensus.

The stock declined nearly 40% at intraday lows, moderating losses to around 30% toward midday trading. The stark drop is the largest on record for the stock and leaves shares at levels last trod in mid 2020.

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