B&N's Nook Sales Record Shortfall
Barnes & Noble has disclosed that Nook sales during the holiday season were disappointing. On Thursday, it provided more detail, saying its Nook business had revenue of $311 million for the nine weeks ending Dec. 29 -- down 12.6% from the same period a year ago.
Sales of digital content -- including e-books, apps and magazines -- increased 13.1%, while Nook unit sales dropped from the holiday season a year ago.
"NOOK device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of the holiday,” stated Barnes & Noble CEO William Lynch. “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward."
The company had added the Nook HD and Nook HD+ tablets to its device lineup in the fall to better compete with the iPad and Kindle Fire during the holidays. As a result of the NOOK sales shortfall, Barnes & Noble now expects fiscal-year revenues of approximately $3 billion for the Nook Media unit, and EBITDA losses at a comparable level to fiscal-year 2012.
Revenue for Barnes & Noble’s retail business -- including its bookstores and online results -- reached $1.2 billion for the nine-week holiday period, down 10.9% from a year earlier. The company blamed the weaker performance on an 8.2% decline in same-store sales, store closures and lower online sales.
Core comparable-store sales, which don’t include the Nook, fell 3.1%; fewer shoppers came into its bookstores.
As store traffic to its nearly 700 stores falls, Barnes & Noble loses a key advantage when it comes to e-reader and tablet sales, according to Tom Mainelli, research director, tablets at IDC. “Now that tablets have been around for a few years, people are more comfortable buying online, as they don't feel the need to touch the device first,” he said.
That shift benefits Web-based rival Amazon and its Kindle line of devices. Mainelli noted the online retailer also offers more digital content than Barnes & Noble, including free video streaming for Amazon Prime customers. On top of that, Amazon has added new features like X-Ray for Books to help drive e-book purchases.
The Nook Media division got a lift last week with an investment of $89.5 million from U.K.-based publishing and education company Pearson, giving it a 5% stake in the segment focused on digital media. Microsoft has previously invested $300 million in the Nook business, which now equates to a 16.8% ownership stake.