This spreadsheet sums up the bad news:
Retail sales were down both in store and online, thus giving us a lesson in why you shouldn't tell your customers that you plan to close 20 stores a year for the next decade. It tends to destroy consumer confidence.
The Retail segment, which consists of the Barnes & Noble bookstores and BN.com businesses, had revenues of $1.0 billion for the quarter, a decrease of 9.9% from the prior year. The sales decrease was attributable to a comparable store sales decrease of 9.1% for the quarter, store closures and lower online sales, in line with company expectations. First quarter comparable bookstore sales decreased, reflecting lower NOOK device unit volume and a title lineup last year that included unusually strong sales from The Hunger Games and Fifty Shades of Grey trilogies. “Core” comparable bookstore sales, which exclude sales of NOOK products, decreased 7.2% for the quarter. Excluding the impact of the two mentioned trilogies, Core comparable bookstore sales decreased 2.9%.
The B&N College division reported revenues were up about 2.4%, but in comparison to B&N's overall revenues that 2.4% raised "hardly anything" in terms of revenue to "still not much":
The College segment had revenues of $226 million during a period that did not include a back-to-school rush season, increasing 2.4% compared to a year ago, as a result of new store growth. Comparable College store sales decreased 1.2% for the quarter, reflecting the retail selling price of new or used textbooks when rented, rather than solely the rental fees received and amortized over the rental period.
And then there's the news from B&N's digital division, which is so bad that it even surprised me. Digital revenues and hardware sales were both down from last year because fewer people are buying tablets, ereaders, and content from B&N.
The NOOK segment, which consists of the company’s digital business (including devices, digital content and accessories), reported revenues of $153 million for the quarter, a decrease of 20.2% from a year ago. Device and accessories sales were $84 million for the quarter, a decrease of 23.1% from a year ago, due to lower unit selling volume. Digital content sales were $69 million for the quarter, a decline of 15.8% compared to a year ago, due in part to lower device unit sales as well as the comparison to The Hunger Games and Fifty Shades of Grey trilogies. Excluding the impact of these two titles, digital content sales decreased 6.9%.
I would ignore what B&N is saying about Hunger Games. That movie came out in March 2012 (and left most theaters by mid-April), while this financial report covers May, June, and July. I doubt the spike in book sales generated by the movie last year affected B&N's revenues in the May-July period of 2012.
I wish we could write off some of B&N's drop in revenue as being caused by that movie creating a spike in book sales revenue in 2012, but it's just not plausible. No, B&N's problems are mostly the fault of B&N. They've mismanaged their Nook investment, destroyed consumer confidence, and generally mucked things up.
On a related note, I think we now know why Bill Lynch left. I've been told that I was wrong to describe that event as a firing (given the suddenness) but that doesn't change the possibility that he left in early July because of the previous couple months sales reports.
On the plus side, with Lynch out maybe B&N Chairman Riggio will be able to rescue B&N. Speaking of which, the press release also mentions that Riggio has canceled his plans to buy the retail division from B&N. I guess with retail revenues down there was little point in splitting up the company.