Barnes & Noble faces all the same headwinds as other retailers this holiday season, but its challenges are compounded by the fact that it continues to derive the majority of its revenues from declining sales of physical books.
The operator of 673 book stores said it expects holiday same store sales to decline in the high single digits following a 4.9% comp decrease during the second quarter ended October 26.
Total Barnes & Noble sales declined 8% to $1.7 billion with each of the company’s three segments reporting reduced sales.
The retail division, which includes sales from BN.com, declined 7.5% to $921 million, the college division declined 4.6% to $737 million and most worrisome is the decline seen in the NOOK digital division where sales dropped 32.2% to $108 million. Of that amount, NOOK digital content sales were $57 million for the quarter, a decline of 21.2% compared to a year ago, due to lower average selling prices and lower device unit sales. NOOK device and accessories sales were $51 million for the quarter, a decrease of 41.3% from a year ago, due to lower unit selling volume and lower average selling prices.
Despite the sales erosion, Barnes & Noble mustered a modest profit thanks to expense control. Net earnings during the second quarter increased to $13.2 million, or 15 cents a share, compared to net earnings of $500,000, or a loss of seven cents a share the prior 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 CEO 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 and games and a full selection of NOOK devices, including our recently released new NOOK GlowLight.”