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Tag: bookstores

  • Barnes & Noble Announces Q3 Results, Nook Still Losing Money

    With every passing quarter, Barnes & Noble continues to deliver bad news from its Nook division. What started out as a promising digital alternative to the book store’s traditional business has ended up being a joke in the face of continued innovation from competitors like Amazon. With its latest earnings report, Barnes & Noble proves yet again that it should just jettison Nook already.

    Barnes & Noble announced today that it brought in consolidated revenue of $2 billion in Q3, or a 10.3 percent decrease compared to Q3 last year. Things look a lot better for consolidated earnings as it brought in $173 million compared compared to last year’s $59 million. Barnes & Noble notes that last year’s Q3 earnings were impacted by a $74 million charge it took on unsold Nook inventory. By focusing on selling what it already had instead of introducing new hardware, Barnes & Noble was able to post the small amount of profit seen above.

    “During the third quarter, the company significantly improved its balance sheet and bottom line, while making real progress on our strategic priorities,” said Michael P. Huseby, Chief Executive Officer of Barnes & Noble, Inc. “Retail’s core comparable store sales benefited from a strong title line-up, strong execution and an effective advertising campaign. College entered into the spring back-to-school rush and saw continued growth in its higher margin textbook rental business. This resulted in a slight EBITDA increase for College, even after funding and developing our digital educational applications. We expect the soft launch of our higher education digital product before the end of this fiscal year. NOOK losses narrowed significantly as we achieved our objective of selling through much of our pre-holiday device inventory, while managing promotions to optimize sales.”

    Like always, Barnes & Noble’s best performing segment is its retail business. It notes that its retail business brought in $1.4 billion in revenue, a decrease of 6.3 percent from last year. This decrease in revenue is attributed to declining sales both in stores and online as well as store closings.

    The College segment brought in revenues of $486 million, a six percent decrease from last year. Sales also saw a decrease thanks to a rise in textbook rentals and generally lower textbook sales. The company notes that it was able to offset the decline in textbook sales with higher sales of merchandise in its College stores.

    Finally, Nook brought in revenues of $157 million in Q3, a 50.4 percent decrease from last year. Breaking that down, Barnes & Noble says devices and accessories brought in $100 million while digital content sales brought in the other $57 million. Both are down from last year thanks to a combination of “lower unit selling volume and lower average selling prices.”

    Barnes & Noble notes that it focused last year’s holiday season on selling its existing stock of Nook devices instead of introducing new hardware. This helped the company avoid a massive charge on unsold stock which led to Barnes & Noble only taking a $62 million loss instead of last year’s $191 million loss as a result of the aforementioned inventory charge.

    Even if the losses aren’t as dramatic, Nook is still losing money. Barnes & Noble will surely one day listen to reason and just get rid of Nook, right? Right?

    “We have taken steps to reduce costs and device exposure, while focusing our efforts to reverse the content sales decline,” continued Michael P. Huseby. “We remain committed to delivering world-class reading experiences to our customers through our reading centric e-Ink and color reading devices. The Company is actively engaged in discussions with several world-class hardware partners related to device development as well as content packaging and distribution. As a result, we plan to launch a new NOOK color device in early fiscal 2015.”

    There you have it folks, Barnes & Noble will continue its quest to find an audience for Nook. With the right amount of innovation and content offerings, Nook could be competitive yet again. Allow me to remain skeptical though as Nook is beginning to look an awful lot like the BlackBerry of tablets.

    Image via Wikimedia Commons

  • Barnes & Noble Releases Q2 2014 Financial Results, Nook Still Losing Money

    Barnes & Noble has not had the best year as it attempts to reinvent its physical book store business while losing money on its ailing Nook brand. For its second quarter results, it looks like that trend is continuing with little good news to be had.

    Barnes & Noble reported this morning that its second quarter consolidated revenues came in at $1.7 billion, or an 8 percent decrease from last year. The good news is that its consolidated earnings increased to $76 million, or a 13.7 percent increase from the previous year.

    “During the second quarter, Barnes & Noble grew earnings through improved margins and reduced expenses, while also completing another successful College rush season,” said Michael P. Huseby, President of Barnes & Noble, Inc. and Chief Executive Officer of Nook Media. “The company is focused on executing its plans for the holiday season and our booksellers are prepared to welcome holiday shoppers and recommend thoughtful gift ideas for everyone on their list. We have a terrific book title line-up this holiday season, a leading assortment of educational Toys & Games and a full selection of Nook devices, including our recently released new Nook GlowLight.”

    Let’s just get the bad news out of the way first. Despite Barnes & Noble commitment to the Nook brand, it appears to be dying. In its second quarter, the Nook business, which includes hardware, digital content and accessories, only brought in $109 million, or a 32.3 percent decrease from a year ago. Going deeper, we see that both digital content and hardware sales are both down with device sales taking the biggest hit.

    Barnes & Noble’s retail segment did much better this past quarter with $921 million in revenue. This is only a 7.5 percent decrease from the previous year, and the bookseller chalks that up to the lack of a major release this year, like last year’s Fifty Shades of Grey trilogy, and a number of store closures.

    While revenues may have been down, the bookseller’s retail operation generated $37 million in earnings, or a 21.2 percent increase over the last year. The company says its increase in earnings despite a sales decline was due to “strong expense management, including higher store productivity.”

    The third pillar of Barnes & Noble’s operations – college textbook sales – pulled in $738 million in revenue, or a 4.6 percent decrease from last year. Earnings also declined to $84 million. The bookseller attributes this decline to the increase in textbook rentals, but it was able to offset a potentially larger loss through the “higher margins associated with textbook rentals” as well as “a greater sales mix of general merchandise.”

    For its next quarter, Barnes & Noble expects it retail business to decline in the single digits. There’s no word on what it expects from its Nook business, but it’s probably not good. The company might want to seriously start considering its founder’s offer of taking the retail operation private and selling off its Nook business to a third party.

    [Image: Wikimedia Commons]

  • Barnes & Noble Founder Plans To Buy Retail Operation

    Barnes & Noble Founder Plans To Buy Retail Operation

    Barnes & Noble looked like it was on its way back to relevancy after a number of quarters of profitability thanks to its Nook tablets. That all ended last year as the company began posting losses, and it looked like its Nook business was starting to come up short against Amazon. Now the company may be breaking apart its various businesses in a bid to save the company.

    Leonard Riggio, founder of Barnes & Noble, Chairman of the Board and largest shareholder, announced this morning that he plans to buy the brick and mortar retail business of the book store. There’s nothing set in stone just yet, but it would be the second time in the past few months that an ailing business was bought by its founder. The first, of course, being the acquisition of Dell by its founder Michael Dell for $24.4 billion.

    Riggio’s plan is to only buy the company’s retail business. The Nook business was spun off last year so where does this plan leave that? According to a report from The New York Times, the company is looking into winding down its Nook business.

    It doesn’t mean that the Nook brand, which was spun off from the retail business last year, will be dead. It only means that Barnes & Noble might stop making its own hardware in favor of licensing its own Nook software to other manufacturers. In essence, we’d see tablets and eReaders from other manufacturers running the Nook software. The company would also presumably focus on its software presence on other platforms like Windows 8, iOS and Android.

    If Riggio is successful in his bid to buy the retail operation, it could give Microsoft an opening to purchase the Nook operation. Nook is already closely tied to Windows 8 after Microsoft pumped $300 million into the business last year. Nook is already the best eReader app on Windows 8, and further cultivation at the hands of Microsoft could turn it into a worthy competitor to Apple’s iBooks and Amazon’s Kindle.

    All of this is purely speculation for now, and the Barnes & Noble board may not even approve Riggio’s bid to buy the company’s retail operation. Still, it does look like the company will at least be winding down its Nook hardware operations. A focus on its digital business could just be what Nook needs to become profitable again.

    [h/t: The Verge]

  • eBook Readers Staying Home, Forgoing Visits To The Local Bookstore

    On one hand, the rapidly growing adoption of eBooks is great. I mean, anyone who has ever played with a Kindle has to be impressed by the convenience of the whole system. In only a few seconds after I decide that I want to read the new Murakami book, I can have it in my hands. Plus, anything that allows for more access to books is okay in my book (apologies).

    On the other hand, I’m a huge fan of book – real, tangible book that I can hold in my hand and unconsciously flick the page corners between by fingers as I read. I love the smell, and the sound it makes when I turn a page. I’m kind of a book romantic.

    And I’m also a bookstore romantic. One of the best places on Earth is a great brick-and-mortar bookstore. And according to a report from the Book Industry Study Group, eBook readers are forgoing the trip to the local bookstore.

    No, this isn’t a “print is dead” story. Quite the contrary. The report (which comes as volume three of a consumer study of attitudes toward book reading) shows that all forms of book purchasing are up. “E-book consumers are increasing their purchase of books — both print and e-book formats — online and especially through in-app purchasing,” says the study.

    More than half of the respondents said that they have increased their use of app to buy books and more and a third said that they have increased their use of online retail sites (like Amazon.com) to purchase both eBooks and print books.

    It’s the brick-and-mortar stores that appear to be hurting from this. More than a third of the respondents said that they have decreased their spending at national chains and 29% said the same thing about indie bookstores.

    “The e-book market is developing very quickly, with consumer attitudes and behavior changing over the course of months, rather than years,” said Angela Bole, BISG’s Deputy Executive Director. “One of the strengths of this study is its ability to monitor ‘Power Buyers.’ They are predictors of where the market is moving, providing us with an ideal opportunity to look at what’s coming next.”

    So, the “power buyers” are staying home, and that can’t make bookstore owners very happy.

    Another interesting thing unearthed by this study involves which device folks are using to read their eBooks. The amount of people using all-purpose tablets (not specific eReaders) increased by 4% from the previous survey. And as hard as this is for me to comprehend, 3.9% more people reported to using their smartphones to read their eBooks.

  • Kindle Outsells Print Books, Says Amazon

    Kindle Outsells Print Books, Says Amazon

    The news is coming in today from Amazon that digital books on their popular Kindle e-reader are now outselling all print books on Amazon.com. Surely this signals the end of print books and the bricks and mortar stores that sell them, right?

    Well, probably not. But it is a significant statistic.

    Last July, Kindle sales overtook hardcovers on Amazon. When that was reported, Amazon sold 180 Kindle books for every 100 hardcovers on Amazon.com. That differential is undoubtedly much greater today.

    In January of this year, Amazon reported that Kindle books had overtaken the sale of paperbacks. When that was reported, Amazon was selling 115 Kindle books for every paperback.

    And today, Amazon is reporting a great milestone for digital content – Kindle books are now outselling hardcovers and paperbacks combined. The Kindle was launched in November of 2007, so that means this feat only took 3 1/2 years to achieve. For every 100 print books Amazon sells, they now sell 105 Kindle books.

    Now, of course the “outselling” is based on number of units, not revenue. 790,000 of the 950,000 Kindle books available are $9.99 or less. Paperbacks and Hardcovers usually sell for more, anywhere from $10 to $17 in most circumstances. Amazon also notes that the 105 to 100 Kindle to Print ratio does not include free Kindle books – which would spike it up considerably.

    “Customers are now choosing Kindle books more often than print books. We had high hopes that this would happen eventually, but we never imagined it would happen this quickly – we’ve been selling print books for 15 years and Kindle books for less than four years,” said Jeff Bezos, Founder and CEO, Amazon.com.”

    Here are some more statistics concerning the Kindle:

    • Only 5 weeks old, their ad-supported “Kindle with Special Offers” is already the bestselling member of the Kindle family.  It retails for $25 less than the regular Kindle
    • Amazon has sold three times as many Kindle books in 2011 than it did in the same period in 2010
    • Amazon.co.uk is selling Kindle books and hardcover books at a near 2 to 1 ratio
    • In the last 5 months, over 175,000 books have been added to the Kindle store.

    Should we look at this as any sort of signal concerning the state of print books and bricks and mortar bookstores? Possibly. It is non-debatable that e-books continue to increase in popularity. And very few would argue against the upside of e-readers. I mean, they basically are one pound libraries.

    But print books aren’t exactly dying. Along with this release about the Kindle, Amazon also says that hardcover sales have grown as well. For many people, like this writer, the tactile nature of a print book is something with which I could never part. And the collection factor – having a physical personal library is also something that many people cherish.

    And for the bookstore question, it is true that large bookstore chains have faltered as of late. A few months ago Borders announced it was filing for bankruptcy. Popular stores under the Joseph-Beth and Davis-Kidd names have also closed recently. The growth of online book retailers, with their ease of use and most of the time cheaper selections have definitely moved in on the territory of bigger booksellers.

    But this has allowed for many small booksellers to flourish. They have been able to create a niche for book lovers with a combination of nostalgia and customer interaction. Small shops can specialize simply in books and can survive and even prosper due to low overheads. Big box stores have tried to do too much, both with size and variety of merchandise, according to some.

    Hopefully, this announcement from Amazon signals a boost in reading in general, as opposed to some seismic shift in the book-buying landscape. Kindle and print can both survive and be vital to the growth of the book-reading population and both play a key part in the world staying smart and in turn not sucking.