B&N sees sales drop in Nook business

Barnes & Noble’s Nook business has seen a 26% drop in sales over the last quarter, triggering “significant action” to implement a cost-reduction plan at the business.

The US bookseller reported its third quarter results to the end of 26th January 2013 today (28th February) and revealed that losses in its Nook business had more than doubled since last year, rising to $190m from $83m. The losses were blamed on lower sales, higher operating costs and inventory charges. Sales at the Nook arm of B&N declined by 26% to $316m, primarily due to lower device sales, the company said, but sales of digital content increased by 6.8% in the quarter compared to a year earlier.

The results have triggered an action plan to make costs savings in the Nook business. William Lynch, c.e.o. of Barnes & Noble, said: “In terms of the Nook Media business, we’ve taken significant actions to begin to right size our cost structure in the Nook segment, while also taking a large markdown on Nook devices in order to enhance our ability to achieve our estimated sales plans in subsequent quarters. Coming off the holiday shortfall, we're in the process of making some adjustments to our strategy as we continue to pursue the exciting growth opportunities ahead for us in the consumer and digital education content markets.”

Lynch took the opportunity to pledge Barnes & Noble’s commitment to the Nook business, despite recent suggestions to the contrary. He said: “Without question, our bookstores have made a significant contribution to Nook’s success over the past three years.  And, in turn, our award-winning line of Nook products have proven to be a strong driver of traffic to our stores.”  

B&N also saw a drop in sales in its retail and college businesses. The company said earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $55 million, compared with $150 million for the same period a year ago.

Consolidated net losses were $6.1 million, compared with net earnings of $52m. Retail sales declined by 10.3%, largely due to store closings, to £1.5bn. College revenues dropped by 1.6% to $517m.

The company made no mention of its international sales of Nook devices and content, despite announcing partnerships with John Lewis, Argos, Foyles, Blackwell’s and Sainsbury’s to sell the device in August.

Last week Leonard Riggio, the company’s founder, largest stockholder and chairman, said he wanted to purchase all of the assets of the retail business of Barnes & Noble, though B&N said there was no guarantee this would result in in a sale of the retail business.