Barnes & Noble holiday sales drop on weak Nook revenue

Overall sales down 5.5%, Nook division saw a decrease of 60.5% in revenue

Financial trends and news by Steven Loeb
January 9, 2014
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Only a day after naming Michael Huseby as its new CEO, Barnes & Noble is showing that its new man in charge has his work cut out for him in terms of getting the company back on its feet. Especially when it comes to the struggling Nook.

The bookseller released its figures for the nine-week holiday period, which ended on December 28, on Thursday, and they are down significantly from the year before.

The retail part of the business, which is made up of the company's bookstores and its website, brought in revenue of $1.1 billion, which was a decrease of 6.6% year to year. That was due to a decline of 5.5% in comparible sales. 

But things were much, much worse for the Nook divisions, which includes digital content, devices and accessories.

That segment of the business saw revenues of $125 million, a sharp decrease of 60.5% as compared to a year before.

Breaking it down, devices and accessories fell an astounding 66.7% year to year to $88.7 million. Even digital content sales fell also, though not nearly as much, going down 27.3% to $36.5 million for the holiday season. 

The Nook too such a big hit, in fact, that if you take it out of overall sales, things actually don't look that bad for Barnes & Noble; core comparable bookstore sales, which exclude sales of NOOK products, only decreased 0.2% as compared to the prior year.

The company attributed the steep decline to lower unit selling volume and lower average selling prices.

“Sales in the NOOK segment declined year-over-year largely because during the previous holiday season the company introduced two new tablet products, while no new tablets were introduced this year,” Huseby said in a statement. “Instead, we executed our plan to sell through our existing high-quality devices."

Still, as he must, Huseby also highlighted the positives in the report, mainly that bookstore sales were fine if you don't include the Nook.

"We are pleased with our holiday sales results, especially our core comparable bookstore sales, which were essentially flat and an improvement as compared to the first half of the year," he said.

Nook struggles

Its not a big surprise that the company's e-readers are struggling. In fact, struggling Nook sales are thought to be part of the reason that CEO William Lynch resigned back in July of last year. 

At the time of his departure, Barnes and Noble reported a fourth quarter net loss of $118.6 million, compared to $56.9 million the same quarter the year before. 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, whose revenues declined a full 34% in the fourth quarter to $108 million, and 16.8% for the whole year to $776 million.

In its most recent quarterly earnings report, Barnes and Noble reported that the Nook segment of the business saw revenues of $109 million for the quarter, down over 32% year to year.

Digital content sales were $57 million for the quarter, a decline of 21.2% compared to a year before, while device and accessories sales were $51 million for the quarter, a decrease of 41.3%.

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