Barnes & Noble is struggling in the post-hardback world. The book retailer managed to outlast Borders by getting a solid digital strategy in place before the world decided that bound-books and bookstores are officially obsolete. But now that’s no longer enough.
Two weeks after revealing that it would be discontinuing its current Nook HD and Nook HD+ tablets, the company announced late Monday that CEO William Lynch has resigned. CFO Michael Huseby will be taking over as CEO of Nook Media LLC. Huseby joined Barnes & Noble last year after serving as Executive Vice President and CFO of Cablevision Systems Corporation.
Max Roberts, CEO of Barnes & Noble College, will continue to lead the company’s digital education strategy and will report to Huseby, along with the rest of the Executive Management team of Nook Media. Huseby and Mitchell Klipper, CEO of Barnes & Noble’s retail group, will report to Executive Chairman Leonard Riggio.
“As the bookselling industry continues to undergo significant transformation, we believe that Michael, Mitchell and Max are the right executives to lead us into the future,” said Riggio, in a statement.
The company says it’s currently reviewing its strategic plan and will provide an update when it has something to update.
The news follows the release of BN’s year-end report, which revealed staggering quarterly and yearly losses that were driven primarily by the Nook segment.
Barnes & Noble reported a fourth quarter net loss of $118.6 million, compared to $56.9 million the same quarter last year. Net losses for the 2013 fiscal year totaled $154.8 million, compared to $65.6 million the year before.
At the heart of those losses was Nook… Nook revenues declined a full 34% in the fourth quarter to $108 million, and 16.8% for the whole year to $776 million. The company attributes the steep losses to lower selling volume. Digital content didn’t fare much better. While digital content sales actually increased 16.2% for the whole year, they declined 8.9% in the fourth quarter due to a lack of new Hunger Games and Fifty Shades of Grey books.
So where does that leave Nook? Despite the fourth quarter decline, there’s clearly a demand for digital content.
Unfortunately, Barnes & Noble is in a weird sort of digital/brick-and-mortar limbo. With plans to shutter over 200 stores over the next 10 years, the company knows that on some level, it’s going to have to move away from its brick-and-mortar existence and beef up its digital side. But it’s entering the race way behind the starting line, as Amazon and Apple dominate the game without having to worry about the deadweight of brick-and-mortar stores dragging them down.
In an attempt to cut down on overhead costs, Barnes & Noble announced June 25 that it will be partnering with yet to be announced third party manufacturers to manufacture its Nook tablets going forward. Nook e-readers like the Simple Touch and Glowlight will continue to be developed in-house, but henceforth, its tablets will be co-branded with whatever CE manufacturers it partners with.
The company plans to sell existing inventory throughout the rest of 2013.
Shares were up 3.68% Tuesday morning to $18.34.
Image source: goodereader.com