Barnes & Noble released their latest quarterly financial report today, and the news is as bad as one could imagine. Sales were down slightly in the retail stores and in the college bookstores, which is bad enough, but sales in the Nook Store dropped through the floor.
B&N reported their third quarter earnings (for the quarter that ended January 25, 2014). Overall revenue fell 10% to $2.0 billion, and EBITDA increased to $173 million from $74 million a year ago.
According to the press release, the B&N the retail unit, including the bookstores and BN.com, had revenues of $1.4 billion for the quarter, decreasing 6.3% over the prior year. B&N College, the 600 odd college bookstores which are operated under contract, had revenues of $486 million, decreasing 6.0% as compared to a year ago.
And that brings us to the Nook division. You might want to sit down for this.
According to the B&N press release, revenues for the Nook segment dropped by half as compared to the same quarter last year.
The NOOK segment (including digital content, devices and accessories) had revenues of $157 million for the quarter, decreasing 50.4% from a year ago. Device and accessories sales were $100 million for the quarter, a decrease of 58.2% from a year ago, due to lower unit selling volume and lower average selling prices. Digital content sales were $57 million for the quarter, a decline of 26.5% compared to a year ago, due primarily to lower device unit sales.
In spite of the terrible news, it's not all bad; B&N also reported that they took a smaller loss on the Nook last quarter; their money pit only cost them $60 million EBITA, and not the $190 million loss in the same quarter last year.
One could argue that this is actually good news in that B&N isn't losing quite so much money, but the losses are going to have to eventually be covered by revenues. What with Nook revenues continuing to decline for the 5th straight quarter, there's a good chance that revenues will cancel out the losses at about the point that both reach zero.
But never mind that; B&N has also shared today that they are planning to release another tablet this year. "The Company is actively engaged in discussions with several world-class hardware partners related to device development as well as content packaging and distribution." said Michael P. Huseby, Chief Executive Officer of Barnes & Noble, Inc. said in a released statement. "As a result, we plan to launch a new NOOK color device in early fiscal 2015."
Rumors of said tablet have been circulating since at least last August; at last report it had a model number of BNTV800 and was running Android on an Nvidia Tegra 4 CPU. These details were revealed in a leaked benchmark test in November, and have yet to be confirmed by B&N or by other leaks.
At this point I would think this is another mistake on the part of B&N; as has been pointed out at MobileRead B&N has already lost nearly 1.4 billion dollars investing in hardware. This is not their strength, and since they cannot afford to keep throwing money away I think it would be better for B&N to focus on apps and content.
IMO tablets were B&N's single greatest error. If they had stuck with Nook ebook readers, and never released the first Nook Color, B&N could have saved themselves the money invested in the Nook Tablet and Nook HD/HD+, 3 devices no one wanted to buy - not even after the latter two were cheap and shipped with Google Play.