Sector financial performance:

This company, which is primarily a book seller by book stores, e-commerce sites, and digital book stores, has been grouped into book and magazine retailer sector in book industry.

It seems that demand for books and magazine of companies in this sector, according to the typical company data, has probably been weak and declining in the past several years as indicated by declining traffic/sales units of both their physical stores (down more than 5% annually in comparable store sales) and online stores ( down about 10% annually). Therefore, the traffic seems not to go somewhere else diminished. Increasing online stores due to lower pre-opening costs may dilute traffic but should not be the major reason for quick decline in traffic.

Shrinking revenue has been deleveraging expenses of store and online operation. In addition to promotion and markdowns, which seem to not bring more convention, companies in this sector have been seen shrinking gross margin in the past several years. The typical gross margin is about 27% but the typical SG&A percentage of sales is also at that level. Therefore, companies

are facing a situation that their profit may go down below to zero in 2018.

The typical price/sales ratio is as low as 0.1.

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Company performance:

It seems that the demand for products of this company has been very weak and declined in the past several years as indicated by continuing decline in all channels including comparable store sales, online sales, and sale of its digital books.

The first 39 weeks of fiscal 2018 compared with the same period of 2017

Comparable store sales decreased 5.7% due to lower traffic and higher volume on some certain books prior year.

Online sales decreased 10% due to higher volume on certain books prior year and lower promotions.

Digital book store sales decreased 25% due to lower volume.

The fiscal 2017 compared with 2016

Comparable store sales decreased 6.3% due to lower traffic and higher volume on some certain books in prior year.

Online sales increased 3.7%.

Digital book store sales decreased 24% due to lower volume.

Fiscal 2016 compared with fiscal 2015

Comparable store sales were flat.

Online sales decreased 14.4% resulted from increasing competition.

Digital book store sales decreased 27% due to lower volume.

Its gross margin (including occupancy) has gone down by about 250 basis points to about 28% in 2018 mainly due to deleveraging of expenses and promotions/markdowns. And with the slightly improved SG&A as percentage of sales (to around 27%), its operating margin went down near to 0% in 2018.

Stock performance

This stock currently has a stock price/sales ratio of 0.1. We think that its stock is being relatively fairly valued.