Today, the market is reacting negatively to the Barnes & Noble Q1 earnings report (NYSE:BKS) for fiscal year 2018. The first quarter earnings call and report saw the bookseller miss expectations. For Q1 FY18, analysts forecasted EPS of -$.12 (-12 cents) on revenue of $873 million. Unfortunately for shareholders, Barnes & Noble reported EPS of -$.15 (-15 cents) on $853.3 million in revenue.
In addition, the company stated same-store sales decreased 4.9% this quarter. Regarding full-year guidance of same-store sales, Barnes & Noble maintained its outlook of single-digit declines. In pre-market trading, BKS stock tumbled over 20%. Throughout intraday trading today, Barnes & Noble stock trended up from its lows from the opening bell. BKS stock currently trades at $7.15 per share. Here is a live chart of BKS with an additional tab of the S&P 500 index.
Is Amazon to Blame for Barnes & Noble Q1 Earnings Miss?
All of this comes at a time when retailers are adapting their strategies to combat Amazon’s disruptions. Fortunately, Barnes & Noble has perhaps the most experience dealing with Amazon. Indeed, Amazon’s first market was book retail. The fact Barnes & Noble is still operating after years of Amazon streamlining the book shopping experience should give BKS shareholders peace of mind.
Furthermore, Barnes & Noble has valuable strategic partnerships with educational institutions. Quite possibly, these partnerships are what allowed Barnes & Noble to weather the Amazon storm over many years. For example, many colleges (such as our own, Indiana University) use Barnes & Noble as the primary facilitator for students buying textbooks each semester.
Last, Amazon’s continued disruption of various industries may actually benefit Barnes & Noble over the next couple years. At first glance, this seems counter-intuitive. However, as Amazon becomes increasingly focused on other industries, it will spend fewer resources on retailing books. Simultaneously, Barnes & Noble will maintain its focus and continue to bolster its online capabilities. Therefore, it may actually benefit from Amazon’s new initiatives like grocery and delivery services.