Barnes & Noble misses quarter on slow Nook sales

Nook sales drop 10.5% q/q as e-reader faces stiff competition from Amazon's Kindle Fire

Barnes & Noble, the popular bookstore chain, announced late Tuesday lower-than-expected fourth quarter results, as sales of its Nook e-reader saw a nearly 11% quarter-over-quarter decline.

The company posted revenue of $1.38 billion, up a modest 0.4% from the fourth quarter of 2011, but below analysts' expectations of $1.47 billion. The company also posted a net loss of $57.7 million, or $1.08 a share, compared to $59.4 million, or $1.04 a share, from the year-ago period, and steeper than the 92 cents analysts expected. 

In total, revenue was $7.1 billion for fiscal 2012, up 2% from fiscal 2011.

While bookstore sales were up 4.5% for the quarter, and 1.4% for the fiscal year, this was mainly due to the liquidation of Borders, a major competitor to Barnes and Noble. 

Nook sales were $164 million for Q4 2012, down 10.5% from the comparable quarter in 2011. Barnes and Noble says that the Nook declined “due to higher third-party channel partner returns, lower selling volume and lower average selling prices.”

Still, the Nook division had total fiscal sales of $933 million, an increase of 34% from the previous year.

The Nook, which has been around since 2009, is facing stiff competition from Amazon’s Kindle Fire, which has a majority of the Android market, and Apple’s iPad, which saw large sales from its new release earlier this year.

Barnes and Noble recently partnered with Microsoft to go up against Amazon and Apple for eBook supremacy. Microsoft is investing $300 million for a 17.6% stake in a new B&N digital and college business that has yet to be named.

“In the quarter we also announced a historic new partnership with Microsoft that will include a significant investment in Newco, and that will capitalize the company to fuel continued growth in digital and international expansion," William Lynch, the chief executive of Barnes & Noble, said in a statement.

Sales of digital content, which include digital books, newsstand and apps, stood at $483 million, up 119% for the fiscal year.

“We grew our business in 2012 while continuing to make the necessary investments for the future of the business,” said Lynch.

“As we look out to fiscal 2013, we feel the company is strategically well positioned to grow value for shareholders.”

Barnes and Noble’s College bookstores brought in $228 million in revenue for the quarter, up 5.7% from the year-ago quarter, and $1.7 billion for the fiscal year, down 1.9% from the previous year. The lower sales for the year were due a shift away from selling new and used textbooks, toward textbook rentals for a lower price.

Barnes & Noble shares closed down 4 percent at $14.63 on Tuesday. Shares are down 43% from April, when it announced the deal with Microsoft. 

(Image source: themarysue.com)