Earnings Preview: Barnes & Noble to report Q4 results ahead of Elliot’s deal

The month of June has been eventful for Barnes & Noble (NYSE: BKS). After a prolonged debate about the future, the retailer finally announced that Paul Singer’s Elliott Advisors has decided to acquire it for $683 million with the stock surging 11% post the announcement.

Since the deal is expected to be closed in the third quarter of 2019, Barnes & Noble plans to publish its fourth-quarter results tomorrow before the bell. However, the company would not conduct the conference call due to the impending regulatory approval for the deal closure.

For the fourth quarter, analysts are expecting a loss of 22 cents per share on revenue of $764.87 million. When it comes to the fiscal year period, sales are forecasted at $3.55 billion and earnings of 6 cents per share.

Elliott offer valued the retailer at $6.50 per share. Today, the stock is hovering around $6.67 mark in the morning hours of trading, which is roughly 17 cents more than the deal value.

The bookseller has been one of the firms which have been impacted by the changing consumer trends and the emergence of e-commerce giants like Amazon (AMZN), taking over market share from the brick-and-mortar based firms like Barnes & Noble.

The impact is clearly seen in the comp-store sales trend of the retailer. Since 2017 it has been witnessing negative growth and the jinx was broken last quarter with the firm reporting growth of 1.1% in same-store sales aided by the holiday season.

Looking Ahead

Paul Singer plans to take the bookstore private and plans to bring in James Daunt to run the business. It’s worth noting that Daunt is currently the CEO of Waterstones, the largest bookstore in the UK which was bought by Elliott last year.

Elliott plans to turnaround the firm with the best practices from Waterstones and it would now have more synergies when it comes to negotiating deals with publishers. However, only time will tell how the deal is going to turn out for all the stakeholders.

Barnes & Noble is dubbed as the largest bookstore in the US and is synonymous for books for decades to its aficionados. The company was listed in 1993 and it has been a tumultuous journey to its investors especially over the past decade. After the completion of the deal, the bookseller is beginning a new chapter in its rich history.

With the physical book sales showing signs of revival in the recent past, Paul Singer and his team would try to grab the opportunity to bring back the mojo. Whether it’s going to be a noble journey or not, only time will tell.

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