Abrams Capital Management Is Not Giving Up On Barnes & Noble Education Inc. (BNED)

Seemingly, Barnes & Noble Education is well-positioned to grow in the years ahead based on its current strengths and the existing opportunities in the market. Roughly 53% of the U.S. college and university-affiliated bookstores are managed by their respective institutions, which actually represents a great development opportunity for the company. Even though some institutions may not want to outsource their bookstores, the freshly spun-off company can still increase its market share and expand its store footprint. At the same time, the company is developing its Yuzu digital education platform, which represents a great niche for Barnes & Noble Education considering that both students and faculty are relying more heavily on online and digital platforms when seeking or sharing educational content. It’s also worth mentioning that Barnes & Noble Education operates its stores under management contracts with colleges and universities that are generally for five year terms with renewal options, which diminishes the risk associated with the company’s operations and its revenue streams.

Barnes & Noble Education Inc. (NYSE:BNED) is set to report its fiscal 2016 first quarter earnings results on September 9, before the market opens. Most market participatants might not know what to expect from the soon-to-be released financial report, so we will briefly pinpoint what the recently spun-off education group has been able to generate so far under the wings of its parent company. The sales generated during the fiscal year 2015 by the group amounted to $1.75 billion, lower by $15.3 million from the prior year. New store openings in 2015 boosted sales by $63.2 million, but were somewhat offset by closed stores, which decreased sales by $21.2 million. At the same time, the education group generated a net income of $35.1 million during the 53 weeks of fiscal 2015, compared to $30.2 million reported in the previous year.

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