Poor holiday sales showed both declines in Barnes & Noble’s retail business and its Nook Media business versus last year. Following a successful Black Friday, sales of Nook devices failed to meet holiday expectations, said CEO William Lynch.
“We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward,” he said in a statement.
Retails sales declined 10.9% versus last year while Nook Media sales declined 12.6% versus a year ago.
As a result, Barnes & Noble expects its fiscal 2013 to include single-digit decreases in its retail business and for its Nook business to book record revenues of $3 billion but to lose a similar amount of money as last year, several hundred million dollars.
“The Nook business will scale in 2013,” said Lynch on a conference call discussing the last quarter’s earnings in Nov. “The key to the Nook business is to continue to grow digital content sales.” He also said that the company anticipates its educational digital content business to grow by 50% a year over the next several years. In late Dec., educational publisher Pearson invested nearly $90 million in the Nook Media business, which includes Barnes & Noble’s college bookstore chain.
Barnes & Noble, Inc. (NYSE: BKS) today reported holiday sales for the nine-week holiday period ending December 29, 2012.
The Retail segment, which consists of the Barnes & Noble bookstores and BN.com businesses, had revenues of $1.2 billion, decreasing 10.9% over the prior year. This decrease was attributable to an 8.2% decline in comparable store sales, store closures and lower online sales. Core comparable store sales, which exclude sales of NOOK products, decreased 3.1% as compared to the prior year due to lower bookstore traffic. Sales of NOOK products in the Retail segment declined during the holiday period due to lower unit volume and average selling prices.
While Retail sales of NOOK products fell short of the company’s expectations, bookstore sales of core products exceeded the company’s expectations, and therefore, the company continues to expect fiscal year 2013 Retail comparable bookstore sales to decline on a percentage basis in the low- to mid-single digits.
The NOOK segment, which consists of the company’s digital business (including Readers, digital content and accessories), had revenues of $311 million for the nine-week holiday period, decreasing 12.6% as compared to a year ago. Digital content sales increased 13.1%, while NOOK device unit sales declined during the holiday period as compared to the prior year. Digital content sales are defined to include digital books, digital newsstand, and the apps business.
“We entered the holiday with two great new products, NOOK HD and NOOK HD+, both highly rated media tablets of phenomenal quality,” said William Lynch, Chief Executive Officer of Barnes & Noble, Inc. “NOOK device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday. We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”
As a result of the NOOK sales shortfall, the company now expects fiscal year 2013 NOOK Media revenues of approximately $3 billion, and NOOK segment EBITDA losses at a comparable level to fiscal year 2012.
The Company has made significant investments over the past three years building the valuable NOOK digital retailing platform, which has resulted in millions of digital customers buying content from Barnes & Noble. The company’s digital strategy will continue to center around delivering the best digital reading, shopping and content experience in the market, while also being diligent about calibrating expenses to business trends in order to scale the business to profitability over time.
Barnes & Noble, Inc. will report second quarter results on or about February 19, 2013.
About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE:BKS) is a Fortune 500 company and the leading retailer of content, digital media and educational products. The company operates 689 Barnes & Noble bookstores in 50 states, and one of the Web’s largest e-commerce sites, BN.com (www.bn.com). Its NOOK Media LLC subsidiary is a leader in the emerging digital reading and digital education markets. The NOOK digital business offers award-winning NOOK® products and an expansive collection of digital reading and entertainment content through the NOOK Store™ (www.nook.com), while Barnes & Noble College Booksellers, LLC operates 674 bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. Barnes & Noble is proud to be named a J.D. Power and Associated 2012 Customer Service Champion and is only one of 50 U.S. companies so named. Barnes & Noble.com is ranked the number one online retailer in customer satisfaction in the book, music and video category and a Top 10 online retailer overall in customer satisfaction according to ForeSee E-Retail Satisfaction Index (Spring Top 100 Edition).