Barnes & Noble, Inc. (NYSE:BKS) Q4 2018 Earnings Conference Call - Preliminary Transcript

Jun 21, 2018 • 10:00 am ET


Barnes & Noble, Inc. (NYSE:BKS) Q4 2018 Earnings Conference Call - Preliminary Transcript


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Ladies and gentlemen, thank you for standing by. Good day and welcome to this Barnes & Noble fiscal 2018 year-end earnings conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations Mr. Andy Milevoj. Please go ahead, sir.

Andy Milevoj

Good morning and thank you for joining us on our fiscal 2018 fourth-quarter and year-end earnings conference call. With us today are Demos Parneros, Allen Lindstrom, and other members of our senior management team. Before we begin, I'd like to remind you that this call is covered by the safe harbor disclaimer contained in our press release and public documents and is the property of Barnes & Noble. It is not for rebroadcast or use by any other party without the prior written consent of Barnes & Noble.

During this call, we will issue forward-looking statements which are predictions, projections or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties including those contained in our press release. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. And now, I'll turn the call over to Demos.

Demos Parneros

Thanks, Andy, and good morning, everyone. I'll begin with a brief review of our results and then turn to our fiscal 2019 plans and outlook. Fiscal 2018 proved to be a challenging year for Barnes & Noble as retail dynamics continue to present headwinds for our business. That said, the actions we've undertaken regarding our strategic turnaround plan have laid the groundwork for the future and we are beginning to see modest improvement in some areas.

Our comp sales declined 5.4% in fiscal '18, and we generated EBITDA of $145 million, excluding nonrecurring charges. To put these results in context, you'll recall that in fiscal '18, we created an aggressive long-term strategic turnaround plan, which we have already begun to execute. Turnaround plans take time; and while our performance has been somewhat disappointing, we began to make steady progress in fiscal '18. Building on this foundation, we expect to see results in fiscal '19, improving our EBITDA to a range of $175 million to $200 million and to provide for further improvement in subsequent years.

But before we turn to fiscal '19 and outlook, I'd like to recap steps that we took this past year to improve our results. In fiscal 2018, we began to implement initiatives to stem the sales decline and also to reduce costs. These initiatives include increasing customer engagement to improve conversion, clearing our over-assortment of less productive merchandise, and increasing our omnichannel capabilities. To oversee and lead these initiatives, we also strengthened our senior leadership team with several key hires.

As a result, in fiscal 2018, we saw our store conversion rates improve. We grew our membership program by a half-million members, our cafe business comps are positive in the back half of the