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B&N: Consumers Aren’t Buying Pasta, Tchotchkes, or Nooks

2503902404_ce3be33bc1_bJudging by its most recent quarterly statement, Barnes & Noble’s plan to become a niche retailer has hit a snag.

B&N released the quarterly statement for its second fiscal quarter late on Thursday. The retailer reported that revenues declined 4.5%, to  $895 million.

With a lost off $20.5 million, the EBITDA was also in the negative but also included a $10.5 million charge related to the spin off of B&N Education. The second quarter net loss from continuing operations was $27.2 million, compared to net loss from continuing operations of $5.1 million in the same quarter last year.

Retail revenues totaled $861 million, down 3.1% "due to lower online sales, store closures and a 1 percent comparable store sales decrease", which makes sense given that the recently relaunched website is still pretty fucked up.

And then there’s Nook, which continued to circle the drain. Digital revenues accounted for $43.5 million, down 32% from a year ago, with an EBITDA loss of $21.3 million. And just to put this into perspective, Nook revenues have shrunk so much that B&N has stopped citing both hardware and content sales and instead shared just the one figure (that’s going to make it harder for us to tell that Kindle Unlimited generates more revenue, but it probably still does).

It makes you wonder why Barnes & Noble launched a new Glowlight Plus and a new Galaxy Tab Nook last quarter, doesn’t it? Why not just shut the service down?

While it’s not costing B&N a lot of money to keep the lights on in the Nook dept, the persistent loss is still a drain on resources. Is putting off the bad publicity from the closure really worth the ongoing expense of keeping the service open?

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fjtorres December 3, 2015 um 6:25 pm

Well, the Galaxy Tab they had no choice. Remember, they are contractually obligated to move a million Samsung tablets…
…even if it takes until the next decade.

Doug December 3, 2015 um 6:41 pm

I think you can make a round-number guess as to NOOK hardware vs. content. As far as I know, no outside retailers are selling NOOK hardware any more, and Retail doesn’t sell content. So the amount of hardware sold by retail stores and should be about equal to the "Elimination" figure (that’s the elimination of double-counting of NOOK sales made by the Retail division).

So, about $10 million in hardware and about $34 million in content.

The Retail division continues to have a positive cash flow. Even with $10 million taken out of it for an "executive severance charge," EBITDA still came up in the black… albeit just barely. Bottom line would still be in the red, though, due to the depreciation and amortization.

fjtorres December 3, 2015 um 7:26 pm

$10M in hardware?
That puts an upper limit on Tablet sales of 50,000 per quarter (assuming all the sales were the cheaper Samsung model with zero eink sales. Unrealistic, of course.) So it looks like it really will take them 5 years to sell a million tablets.
More likely, they’ll buy out the contract and take a charge at some point.
Well past the "what were they thinking" point by now.

Al P. December 3, 2015 um 10:02 pm

Love the Glow Light Plus. Yeah, I’m sure I’ll end up a Kindle customer eventually, but I root for the underdog…

Syn December 3, 2015 um 10:10 pm

If they weren’t such a terrible company as far as customer policies, I’d root for them too. We do need competition to keep prices down and things interesting.

puzzled December 4, 2015 um 3:29 am

Is pasta considered hardware or software?

I know that when I go shopping for pasta, the first place I think of is B&N…

Richard Adin December 4, 2015 um 3:46 am

Interesting as just yesterday I read an analyst’s report that was very positive on B&N being a successful turnaround and changing his rating to "buy". The report thinks the stock will rise to over $19/share by the end of 2016.

B&N: Consumers Aren’t Buying Pasta, Tchotchkes, or Nooks | The Passive Voice | A Lawyer's Thoughts on Authors, Self-Publishing and Traditional Publishing December 4, 2015 um 11:01 am

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Reader December 4, 2015 um 12:28 pm

Sadly,B&N’s problems are self-inflicted. The decline in e-book sales is largely due to repeated website snafus. B&N’s new Glowlight Plus has some problems from my perspective.

1)Without any light, the background is gray, which doesn’t compare well with the Nook Simple Touch background. I don’t care if the background looks better with the light turned on, as I am going to have the light turned off to maximize battery life.
2) B&N got rid of thick fonts, like Helvetica- which is the one I used on the Simple Touch.
3)Third problem: if you press too hard on the side, you get out of the book you are reading and get sent back to the default screen. This is a consequence of getting it as thin and light as possible. With most e-readers, the sides of relatively thick plastic are not so sensitive.
4) It has already been pointed out the problem of compatibility with library e-books. While this appears to be a problem that is getting solved, it should have been addressed before B&N started selling the Glowlight Plus.

I wonder how much customer testing B&N did, to see how consumers responded to what the engineers thought would be cool. I suspect not much.
I have no sympathy whatsoever for B&N.
Bunch of idjits.

gingeroni December 4, 2015 um 3:32 pm

My Nook (simple touch?) from 2011 is still the best ereader except for the dying touch screen. The back ground is almost true white and the text is pure black, crisp and easy to read in any lighting that supports a paper book. I only switched because after a year of use the touch screen would stop working after a few hours. I could still read with the side buttons but couldn’t switch to another book when I got to the end. It was beyond frustrating. I got a Kobo mini and then an Aura(?) after that. The Kobos are ok but the mini is too small to read. They’re both very reliable. I just got a Kindle paperwhite (Black Friday sale) and it’s unreadable without the frontlight. The eink background is just too dark. I’m still trying to find a good font and navigation is wonky. Maybe it’s just a learning curve problem but I can’t seem to find anything by browsing. I have to know what I want then search for it.

B&N: Consumers Aren’t Buying Pasta, Tchotchkes, or Nooks | Michiko Katsu December 4, 2015 um 4:51 pm

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fjtorres December 4, 2015 um 4:58 pm

CNN’s take on B&N’s finances isn’t positive:

Mackay Bell December 4, 2015 um 7:44 pm

Sounds like a brand identity problem. What if they changed their name from Barnes and Noble to Noble Pasta? Or Barne’s Toys and Nicknacks?

Reader December 5, 2015 um 12:17 pm

I just got a Kindle paperwhite (Black Friday sale) and it’s unreadable without the frontlight. The eink background is just too dark.

Interesting that both the Kindle Paperwhite and the Nook Glowlight Plus have a background problem when unlit. I can’t speak for all Kobo backlit e-readers, but at least the Kobo Aura HD has a good background when unlit.

Given the problematic nature of replacing e-reader batteries, I would rather replace my household lights than my e-reader batteries.

I concur with your opinion of the Nook Simple Touch-a very good reading machine- which makes the Nook Glowlight Plus even more frustrating. B&N used to know what to do. I bought a used Simple Touch on CraigsList which has also had a touchscreen problem- but not before I had to replace its battery. The Simple Touch that I bought new is still going strong.

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[…] Digital Reader had some recent B&N news too. And what made me raise my eyebrows there was that apparently, B&N is now selling pasta. […]

Frank December 9, 2015 um 9:55 am

I just got a Kindle and it’s unreadable without the frontlight.

You cannot turn off the frontlight on a Kindle (without hacking it) and there are many settings to change things. The best font is bookerly.

RJ Grand January 30, 2016 um 12:11 am

Is the 50% drop in e-book sales due to B&N reporting that because they’re not reporting correct e-book sales to authors? A while back when I read author complaint boards on B&N, there were endless remarks that their e-book sales had basically bottomed out while other stores' sales upheld their averages.

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