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Giant US bookseller Barnes & Noble has reported a marginal decrease in sales in its second quarter with strong growth at BN.com and across its Nook range of digital readers failing to offset the continuing decline in physical book sales. Profits rose slightly despite the increasing costs of growing its Nook business.
Total sales decreased 0.6% as compared to the prior year, from $1.90bn (£1.21bn) to $1.89bn. Barnes & Noble store sales decreased 1% from $931m to $918m, with comparable sales decreasing 0.6%. Barnes & Noble College sales declined 4% from $797m to $768m, due to a shift from selling new and used textbooks to lower priced, higher margin textbook rentals. BN.com sales increased 17% over the prior year, from $177m to $206m.
Comparable sales increased 38%, on top of a 59% increase a year ago—though this figure includes sales from agency priced e-books rather than just the commission.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 21% over the prior year, from $46m to $56m, with profits from its physical book business helping to alleviate the costs of its growing Nook and e-book operations. Retail EBITDA grew to $21m; college EBITDA declined slightly to $93.9mn. BN.com EBITDA losses increased from $50.2m to $58.9m, driven by planned product markdowns on the recently announced Nook, as well as higher advertising production costs.
The consolidated Nook business across all of the company’s segments, including sales of digital content, device hardware and related accessories, increased 85% in the second quarter to $220m, on a comparable sales basis. However it was down from the $277m reported in the company's first quarter.
Nevertheless the company reported that its newly launched Nook tablet was already its fastest-selling Nook product with sales across all devices four times what they were last year. Over the three-day Thanksgiving weekend, comparable store sales increased 10.9% at Barnes & Noble stores, on top of 17% comparable store growth last year.
William Lynch, chief executive officer of Barnes & Noble, said: "We expect to sell millions of devices during our third quarter, adding to the millions of current Nook customers. This growing base of customers buying digital content from Barnes & Noble will continue to position us as one of the fastest growing companies in this exploding digital content market, and we project this will generate significant returns on our investments for years to come."