B&N Reports 2014 Holiday Sales Decline Not Quite as Bad as Last Year’s Sales Decline

BarnesB&N Reports 2014 Holiday Sales Decline Not Quite as Bad as Last Year's Sales Decline Barnes & Noble ebook sales & Noble put out a new press release today which touted their performance over the 2014 holiday season, and about the best you can say is that the decline in sales this year wasn't as large as the decline in sales last year.

The news still isn't good, though. Sales via B&N's stores dropped 6.6% from last year. In comparison, the 2013 holiday season showed a 10% drop from 2012. The Nook division took in $125 million in content and hardware sales, which is down from 311 million reported last holiday season.

Obviously B&N's plans of closing stores and cutting staff hours until they achieve profitability is also resulting in a drop in sales quarter after quarter, but it has yet to actually accomplish the goal of making B&N profitable.

It's also pretty obvious from the decline in digital content sales that the Nook platform is dead in the water. Whether this is going to inspire B&N to sell it or simply shut it down, I cannot say. But as anyone could have told you, B&N is going to have to do something with the Nook division this year. I don't think the current plan of ignoring it to death is terribly productive, do you?

The Press release:

Barnes & Noble, Inc today reported holiday sales for the nine-week holiday period ending December 28, 2013.

The Retail segment, which consists of the Barnes & Noble bookstores and BN.com, had revenues of $1.1 billion, decreasing 6.6% over the prior year. The decrease was attributable to a 5.5% decline in comparable sales and store closures. Core comparable bookstore sales, which exclude sales of NOOK products, decreased 0.2% as compared to the prior year.

The NOOK segment (including digital content, devices and accessories), had revenues of $125 million for the nine-week holiday period, decreasing 60.5% as compared to a year ago. Device and accessories sales were $88.7 million for the holiday period, a decrease of 66.7% from a year ago, due to lower unit selling volume and lower average selling prices. Digital content sales were $36.5 million for the holiday period, a decline of 27.3% compared to a year ago due to lower device unit sales and lower average selling prices.

P.S. On a related note, this press release has convinced me that Apple now has a larger share of the ebook market than B&N. Apple might possibly be doing $500 million to $1 billion a year in ebook sales, and we can clearly see B&N is selling less than that.

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

37 Comments

  1. flyingtoastr9 January, 2014

    WSJ reported yesterday that BN has a 20% share of the US ebook market. Unless Apple kicked Amazon in the teeth, BN is still number 2.

    Reply
    1. Nate Hoffelder9 January, 2014

      20% when, exactly?

      I would bet $100 that WSj figure is outdated. B&N’s share has been declining since the last holiday season. It’s just not possible for them to have 20% of the market anymore – not after this past holiday season.

      Reply
      1. fjtorres9 January, 2014

        I doubt either has 20% of the US market.
        I don’t doubt that Apple is raking in more in sales than Nook since they are a global player and Nook isn’t, but there is no reason to believe Amazon is running much lower than 60%.
        I could see either (or both) running at 15-17%, with the rest going to Kobo, Google, and the Wannabes…

        (As for Apple’s US gross, $500M is more likely than $1B–they would have to be running at 33% to get to 1B: 2012 was $2B so the best guess for 2013 is closer to $3B than $5.)

        Reply
      2. fjtorres9 January, 2014

        WSJ here:

        http://online.wsj.com/news/article_email/SB10001424052702303848104579308291857560248-lMyQjAxMTA0MDAwODEwNDgyWj

        But that 20% is based on B&N’s *internal* numbers.
        They haven’t proven too adept at reading the market before, so…

        Reply
      3. flyingtoastr9 January, 2014

        As of October. The WSJ cited that BN’s ebook marketshare had decreased from 27% to 20% in a year (2012 to 2013).

        I have a theory for why the estimates of the total ebook market don’t jive with BN’s sales numbers and marketshare estimates. When BN first started breaking content sales out, they reported ebook sales based on the commission they were earning under the agency model (for example, if BN sold a copy of Hunger Games for $9 they would report the sale as $3, while industry estimates would use the total price). In effect, BN’s content sales were actual revenue instead of sales. If they’re still reporting in the same manner (and given that they haven’t filed with the SEC for a change in reporting), it would explain the disparity.

        Incidentally, such reporting would also explain some of their drastic decrease in sales since June. Decreasing margins (such as going from 30% commissions with agency to lower under wholesale discounted prices) would affect the sales reporting as well, making an already poor position look even worse.

        Reply
  2. yuzutea9 January, 2014

    The new CEO claims that tablets are necessary for Nook, but that he no longer sees the company competing with Apple (unsurprising) or Amazon (?). I wonder if he means that they’re going to go into a price range lower than Amazon’s, so they’ll no longer be competing with them?

    I think it’s going to be harder and harder (for anyone who isn’t Apple, Samsung, or Amazon) to sell tablets in America given that more people have tablets and the market is more saturated. About 1/3 of Americans over 18 had a tablet in June 2013, which was a big leap from 18% in 2012. I wouldn’t be surprised if it was 40% by now.

    Reply
  3. Alexander Inglis9 January, 2014

    You’re all wrong: Clearly, Sony eReader Store is the far out ahead leader …. *rolls eyes*.

    B&N Facts:
    Retail segment had revenues of $1.1 billion, decreasing 6.6% over the prior year
    NOOK segment revenues of $125 million, decreasing 60.5% YoY
    Device and accessories sales of $88.7 million, a decrease of 66.7%
    Management said device sales were down because they had no new products and were still “executing a plan” to get rid of end of 2012 inventory.

    Conclusion:
    “We are pleased with our holiday sales results, especially our core comparable bookstore sales, which were essentially flat and an improvement as compared to the first half of the year,” said Michael P. Huseby, Chief Executive Officer of Barnes & Noble, Inc.

    No mention of college store performance and nothing about impact, if any, of “global expansion” of Nook store on Windows 8 platform (only).

    Reply
  4. fjtorres9 January, 2014

    CNET is describing Nook’s holiday sales as “abysmal”:
    http://news.cnet.com/8301-1023_3-57616949-93/barnes-noble-announces-abysmal-holiday-nook-sales/

    They identify the 9 week digital sales at $36M.
    Which (gulp!) works out to an annualized rate of $210M…
    That is… 10% of the 2012 market…

    Reply
    1. Nate Hoffelder9 January, 2014

      And the 2012 market was probably bigger than the 2013 market …

      Reply
      1. fjtorres9 January, 2014

        Lower by 50 %?
        That’s the only way $210M = 20% of 2013.
        I thought you were the one who debunked the ebook market decline meme. 😉

        Reply
        1. Nate Hoffelder9 January, 2014

          I didn’t think that through.

          Reply
  5. Ben9 January, 2014

    Nate, why are you always so gloomy with B&N? By your definition, B&N should die already…

    Ranked #63 as a retailer for 2013…sure, they are losing the war on ereaders, ebooks, tablets and all things digital…maybe be even losing in retails but I would not ignore over $1 billion in revenue as nothing and irrelevant.

    Can they improve? Of course. I don’t see B&N on the same path as say, Blackberry or Palm.

    Reply
    1. Nate Hoffelder9 January, 2014

      I’m not always down on B&N; just yesterday I defended their decision to come to CES without the Nook.

      Reply
  6. Paul9 January, 2014

    I wonder if the Nook decrease is because of the push of cheaper books. i.e. when people used to buy $9.99 ebooks they now buy $4.99 ebooks instead. I’m surprised that the stores are doing so badly. They always seem busier than the previous year.

    On a different note I think appointing the CFO as CEO is a mistake. Because it means exactly what it implies, managing money, not strategy. B&N’s only strategy now should be to focus on customer service. You can tell there are making cuts in the backend by how long it took for my new Nook glow light to turn up (and I will say that the login and registration was easier than Kobo’s).

    Reply
    1. Nate Hoffelder9 January, 2014

      I thought that Huseby becoming the CEO was a sign that penny-pinching was their strategy. I hope I’m wrong.

      Reply
    2. flyingtoastr9 January, 2014

      The stores did phenomenally well this holiday (which is why BN’s stock is up 7% today).

      Online shopping increased this year by nearly 15% over 2012, yet BN’s comp store sales for their core products (books) only declined by 0.2% (the 6.6% decline is if you’re including NOOK devices and looking at total sales – not same-store comp sales). That alone proves that something BN did this winter worked. If they can maintain that kind of market they can easily keep the lights on for a long time.

      As it’s been for years now – BN looks in worse financial position than they are because of the NOOK division dragging the company down. The stores are fine.

      Reply
      1. Alexander Inglis10 January, 2014

        Flat same store sales (gross revenue), year over year, is not “phenomenally well”. This is also not a financial report, but a press release: so no word on whether those flat revenues represented improvements in profits for the period.

        Bloomberg reported US holiday sales rose 3.5%, according to MasterCard Advisors SpendingPulse. To call out B&N’s performance as adequate would be to hit those targets; outperform the market would be 5% or better. So … phenomenally well? Uh, no.

        Reply
        1. Nate Hoffelder10 January, 2014

          I doubt that B&N is more profitable; if they could have announced news that good I think they would have.

          Reply
          1. flyingtoastr10 January, 2014

            No they wouldn’t. Sales are incredibly easy to compute – just pull out all the register receipts and add them up. Profit is wayyyyyyyyyyyyy more complex – they have to bring in things like margins, depreciation, taxes, cost of occupancy, marketing, expenses, etc. And on top of that you have to remember that these specific results are for a 7 week period – NOT a full quarter (for instance – let’s say BN bought a block of TV advertising for between November 1st and December 25th. Do the costs there count in these 7 weeks even if it was paid before then and started before?). So it becomes even more complex to compute when the systems for accounting are all based around quarters.

            Almost no company releases unaudited profits. It’s far too large of a risk. We’ll find out at the end of February how BN did.

  7. Paul9 January, 2014

    Barnes and Noble’s troubles are partly because of the Justice Dept says business week.

    http://www.businessweek.com/articles/2014-01-09/barnes-and-nobles-nook-sales-hurt-by-amazons-lower-e-book-prices

    Reply
    1. Nate Hoffelder9 January, 2014

      That is a disappointingly simplistic explanation from Businessweek. It doesn’t explain the drop in the number of devices sold. Also, it doesn’t explain how the AAP (and Smashwords) reported that the ebook market remained flat but B&N’s sales dropped.

      Reply
      1. Paul9 January, 2014

        I don’t think its the whole story, but I do think there is some truth to that.

        Reply
        1. Ben9 January, 2014

          The article only got what Apple and Amazon is doing right because they are executing them and B&N isn’t doing much to compete. It is not that complicated when others are putting more efforts in ebooks to maintain or growth their market share… “partnering” with hardware maker on Nook when IDC predicts global tablet market is getting saturated and slowing, “partnering” doesn’t sound like a great strategy.

          Reply
      2. fjtorres10 January, 2014

        Dragging in the price fix is meaningless because Nook’s problems started under the conspiracy, back in 2012.

        The one thing the article got right was this:
        “Barnes & Noble hasn’t given customers many other reasons to opt for the Nook over rival devices. Amazon continues to roll out new publishing services that are exclusive to customers of Amazon. Day One, a smart new literary magazine, includes short stories and poems. Kindle Worlds is a program that opens up a catalog of legal fan-fiction based on well-known literary characters.”

        And for all the Amazon whining, which is the player that has gone from zero to 15%, effectively soaking up Nook’s share? Apple.

        Those are the wages of crime.
        All the BPHs achieved with the conspiracy is replace a Kindle-Nook duopoly with a Kindle-iBooks duopoly.

        Reply
        1. flyingtoastr10 January, 2014

          Citation for Apple’s marketshare. Oh yeah, you don’t have one, because Apple doesn’t break out content sales.

          Reply
  8. Fbone9 January, 2014

    Well, B&N showed their hand with the latest press release.
    $36.5 million in content sales is $579,000/day which works out at about 100,000 titles/day.

    Amazon, Apple et al just have to do their math.

    Reply
    1. fjtorres10 January, 2014

      I’m pretty sure Amazon sells more than 100,000 KDP titles a day.
      They might even be selling more KDP Select titles, though that’s a reach.

      Reply
      1. flyingtoastr10 January, 2014

        Citation please.

        Reply
  9. Nate Hoffelder9 January, 2014

    Do you know what i just realized?

    B&N is setting themselves up to be knocked down. They don’t have to release this level of granular data; Amazon doesn’t, Apple doesn’t, and many other publicly traded companies are incredibly nonspecific about how each division is doing.

    I wonder if they started listing the specific segments when the Nook division was young and growing simply to show off? If so then it’s past time that they stop being so specific.

    Reply
    1. Ben9 January, 2014

      They don’t need to be so specific but when you dont have a long term strategy for Wall Street, you answer with enough numbers to distract investors until they forget about the need for strategy.

      I do agree naming a CFO to CEO is another potential upper management mistake in the making.

      On paper he had a lot of credentials, 2004-2011 as EVP/CFO of Cablevision…1999-2002, EVP at AT&T…2012-present, CFO-CEO at B&N…where does his 23 years with the epic failed Arthur Andersen fit into this picture? Best part? He didn’t bother to list it in his LinkIn profile. Why would you be so ashamed of a place you work for over 23 years?

      B&N doesn’t need to compete against Apple or Amazon or tech companies, B&N is a retailer at heart. B&N may be rooted in books but it can change that and it needs to change for them to stay relevant. Everything else is just a distraction.

      Reply
      1. Ben9 January, 2014

        **correction**
        Sorry, now I see his Andersen listing in his LinkIn profile…

        Reply
    2. Doug10 January, 2014

      NOOK Media is financially separate from B&N. B&N holds most of the stock in NOOK Media, and still reports it as part of the total B&N financial picture, but no bookstore money and no BN.com money flows into NOOK Media. So, it makes sense to report separate figures for NOOK Media, which must live or die on its own assets and revenue streams. (Unless someone should decide to re-integrate NOOK Media back into B&N.)

      B&N “the bookstores” are profitable, and probably will remain so for some time to come. BN.com was never profitable over the decade or so that B&N reported separate figures for it, and I strongly suspect it continues to lose money — money that is replaced from bookstore profits. NOOK Media is, um, struggling financially, even with the college bookstores providing a profit stream. B&N, though, is in solid financial shape, even if it should have to write off the value of its NOOK Media stock.

      Reply
      1. Nate Hoffelder10 January, 2014

        B&N still owns the majority share and still treats Nook Media like a wholly owned sub. At this point the separation is more of a legal fiction than a practical reality.

        Reply
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