Yahoo Finance Barnes & Noble swings to 3rd-quarter profit
Barnes & Noble returns to profit in 3rd-quarter on cost cuts
NEW YORK (AP) -- Barnes & Noble reported a third-quarter profit as cost cuts at its Nook unit and elsewhere helped offset declining revenue across all of its businesses.
The company also for the first time dismissed an offer it received last week from an investment firm for a 51 percent stake in the company.
Net income beat expectations and shares rose nearly 4 percent in midday trading.
Barnes & Noble has been trying to turn itself around as competition from discount stores and online retailers toughens, and as consumers shift away from traditional books to digital formats. The chain has invested heavily in its Nook unit, but that division has not been profitable.
The company said Wednesday that it is working to improve the value of its Nook unit.
Barnes & Noble, as it announced earlier, cut some jobs after the quarter ended and said that there may be more job cuts ahead. It established hardware and distribution partnerships with other companies, rather than handling those functions internally.
That led to 75 job cuts, the company said. Since fiscal 2014 bean, it has cut 190 jobs through attrition and layoffs.
CEO Michael Huseby said in a call with analysts that the company is trying to create better ways package physical and digital content, calling the digital side "vital to our mission."
Nook losses narrowed "significantly," he said, as the company cleared a backlog of tablets that it didn't sell, as it had hoped to, during the holidays. But much of those sales were driven by discounts.
Huseby disregarded an offer of $672 million from the investment firm G Asset for a controlling stake in the company.
"From what we could tell from publicly available information they have one employee, extremely limited financial means and as set forth in his letter he has no debt or equity financing to support his proposal," Huseby said. "Accordingly, we do not consider it to be a proposal worthy of further discussion or action by us."
Net income for the three months ended Jan. 25 totaled $63.2 million, or 86 cents per share. That compares with a loss of $3.7 million, or 14 cents per share in the prior year period. Analysts expected 51 cents per share, according to FactSet. Year ago results include $74 million in inventory related charges.
Revenue fell 10 percent to $2 billion, from $2.22 billion last year. Analysts expected $2.01 billion. Revenue from retail stores fell 6 percent to $1.4 billion. Revenue in stores open at least one year, a key retail metric, fell 4.9 percent.
Barnes & Noble stuck by earlier projections of single-digit percentage declines in revenue at its stores, and declines of low- to mid-single digit range at college stores.
Shares rose 68 cents to $18.40. The stock is up nearly 19 percent since the beginning of the year.
