Barnes & Noble Becomes Old JC Penney

Barnes & Noble Inc. (NYSE: BKS) has now become J.C. Penney Co. Inc. (NYSE: JCP) in 2012, the year its revenue fell 25% from the prior year’s level. Same-store sales dropped by roughly the same amount, and J.C. Penney teetered toward extinction. Barnes & Noble just announced a 4.5% dip in sales for its second fiscal quarter, with brick-and-mortar sales down 3.1%. Same-store sales for the quarter were down 1%. Sales in Barnes & Noble’s Nook business tumbled 32%.

The overall brick-and-mortar environment is worse now than in 2012. ShopperTrak reported physical store sales fell 10.4% over the four-day Thanksgiving weekend to $20.3 billion. Barnes & Noble stores operate in a retail world in which same-store sales have to rise for a national retailer to come close to gaining ground.

Traditional retailers have become desperate, which means they will go to risky lengths to hold holiday sales levels from last year. Most have given up chasing growth. Even the largest retailers, which include big-box Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT) and department stores like Macy’s Inc. (NYSE: M), have forecast grim holidays. Large niche retailers like electronics company Best Buy Co. Inc. (NYSE: BBY) won’t do any better. Excluding sales of Nook products, same-store sales for the current quarter through the Black Friday weekend were up just 1.1%.

Amazon.com Inc. (NASDAQ: AMZN) is at the top of the list of traditional retailer challenges. It has forecast revenue increases as high as 20% to $35 billion. Old-line retailers have no chance to approach this number. Their e-commerce businesses are too small. They cannot make up for the hole made by battered store sales.

For the current (2016) fiscal year, Barnes & Noble is guiding same-store sales approximately flat with the prior fiscal year, including Nook sales, and up about 1% excluding sales from its Nook business. On the basis on continuing operations, the quarterly loss totaled $0.36 per share, compared with $0.16 last year. Both numbers exclude the college division, which Barnes & Noble spun off in August.

Barnes & Noble’s shares traded down more than 22% Friday morning at $9.35, a new 52-week low. The 52-week high is $19.00. The consensus price target for the stock is $20.00. Year to date, the shares are down about 38%.
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