Barnes & Noble Posts Q3 Loss on Lower Nook Sales28 Feb, 2013 By: Erik Gruenwedel
Bookseller Barnes & Noble Feb. 28 reported a third-quarter (ended Jan. 26) loss of $6 million compared with net income of $52 million during the previous-year period. The chain generated retail revenue of $1.5 billion for the quarter, down 10% over the prior year. This decrease was attributable to a 7.3% decline in comparable store sales, store closures and lower online sales.
New York-based Barnes & Noble, which is a major retailer of packaged media, including DVDs and Blu-ray Disc, cited sales declines within its Nook tablet business for the loss.
The Nook competes in ultra competitive tablet market that includes the Apple iPad, Samsung Galaxy, Amazon Kindle Fire and Microsoft Surface, among others. Indeed, Microsoft is a partner in the Nook business.
The Nook segment, which includes devices, digital content and accessories, generated revenue of $316 million, down 26% as compared with $426 million during the same period a year ago. Pre-tax loss more than doubled to $190 million compared with $83 million last year.
In addition, the Nook segment recorded $21 million of incremental channel partner returns given the holiday sales shortfall, as well as $15 million of promotional allowances to optimize future sales opportunities. Digital content sales increased 6.8% for the third quarter over the prior year.
CEO William Lynch said the company is taking “significant” action to streamline costs while also taking a large markdown on tablets to help achieve 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 growth opportunities ahead for us in the consumer and digital education content markets,” Lynch said in a statement.
He said Barnes & Noble remains committed to the tablet and e-reader business.