Barnes & Noble sales sink first time in 3 years

Bloomberg

Barnes & Noble Inc. posted its first decline in holiday sales in three years, hurt by a downturn in the coloring-book category, bringing another sign that the Christmas season wasn’t kind to retailers.
Same-store sales sank 9.1 percent for the nine-week holiday period, the New York-based company said. Coloring books and other art supplies — products that had surged last year in part because adults were embracing them — were particularly weak. Still, Barnes & Noble expects to bolster its operating profit by keeping a tight lid on expenses.
The results add to a bleak outlook from two department-store chains, Macy’s Inc. and Kohl’s Corp., which both cut their annual profit forecasts on Wednesday. Barnes & Noble also has struggled with internal turmoil: The retailer ousted Chief Executive Officer Ron Boire in August, with founder Len Riggio stepping back into the role.
Riggio previously said that shopper traffic was hurt by the by the polarizing presidential campaign and that he expected business to pick up again after the election in early November. Instead, the entire retail industry was sluggish at year-end, he said in an interview Thursday.
“We were surprised — as all retailers in America were surprised — that the holiday season traffic remained as negative as it was in pre-holiday season,” Riggio said. “I thought after the election, we would bounce back.”
The shares fell as much as 7.5 percent to $10.55 in New York, the biggest intraday decline in almost four months, after the results were posted. The stock had gained 24 percent in the past 12 months, a sign investors were getting more confident about a Barnes & Noble comeback.

‘Double-Whammy’
“Bookstores and Barnes & Noble had significantly softer traffic and were lapping some unusual benefits of the coloring-book trend of 2015,” David Schick, an analyst at Consumer Edge Research, said in an e-mail. This was a “double-whammy.”’
Riggio said the latest results aren’t a sign that its book business is in trouble. While revenue from books declined, it was less than the companywide drop, he said. For the top 100 bestsellers, sales actually rose. Other categories that largely depend on shopper traffic, such as gifts and music, are what really weighed on the results, he said.
And then there was the demise of the coloring-book trend.
“The coloring craze came from nowhere,” Riggio said. “It seems to be going back to where it was. We’ve always sold coloring books, but there was an explosion. Was it a fad? I don’t know.”
Taking the holidays into account, the company now expects earnings before interest, taxes, depreciation and amortization to be at the low
end of its previous forecast of $200
million to $250 million.
The company also isn’t planning to close a large number of stores and might reduce the total by a handful this year, he said.
“I’m not looking for excuses — we had a lousy season,” Riggio said. “We have to work hard to get back on track. We are confident we will.”