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B&N Reports Revenues Down, Announces Plans to Shuffle the Deck Chairs And Sing "Nearer My God to Thee"

nookshd[1]Barnes & Noble has just released their year-end report for FY 2013, and there is bad news and worse news.

The tl;dr version of today’s news is that B&N lost money and market share this past year, and in response they decided to make a minor change to their current operations in the hopes that it will fix everything.

Here’s the bad news:

Fourth quarter consolidated revenues decreased 7.4% to $1.3 billion as compared to the prior year. The consolidated fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $122.0 million, as compared to a loss of $9.7 million in the prior year. The consolidated fourth quarter net loss was $118.6 million, as compared to the prior year net loss of $56.9 million. Fourth quarter net losses were $2.11 per share as compared to a net loss of $1.06 per share a year ago.

For fiscal 2013, consolidated revenues decreased 4.1% to $6.8 billion as compared to the prior year. Fiscal 2013 consolidated EBITDA was $10.3 million, as compared to $176.7 million a year ago. Fiscal 2013 consolidated net losses were $154.8 million, or $2.97 per share, as compared to $65.6 million, or $1.35 per share in the prior year.

Here’s more bad news:

The NOOK segment, which consists of the company’s digital business (including devices, digital content and accessories), had revenues of $108 million for the quarter and $776 million for the full year, decreasing 34.0% for the quarter and 16.8% for the year, as compared to the year ago periods. Device sales declined during the fourth quarter due to lower selling volume. Digital content sales increased 16.2% for the full year, however, they decreased 8.9% for the fourth quarter due in part to the device sales shortfall as well as the comparison to the The Hunger Games and Fifty Shades of Grey trilogies a year ago.

I wouldn’t get to excited about the fact that digital content sales increased by 16%. That is a far smaller growth than reported by Amazon, and that 16% is even smaller than the AAP’s estimation for the increase in the US ebook market (44%). Also, a good chunk of that increase probably came from video sales.

In other words Nook’s share of the ebook market shrank in 2012.

And here’s the worse news. Barnes & Noble didn’t announce any radical plans today.

They haven’t sold off Nook Media yet, nor are they getting out of the hardware business – not completely. They’re going to continue to design their own ereaders, but they are no longer going to make tablets:

Thus, the widely popular lines of Simple Touch™ and Glowlight™ products will continue to be developed in house, and the company’s tablet line will be co-branded with yet to be announced third party manufacturers of consumer electronics products.

Funny thing is, June has come and almost gone and there is no new Nook. I think that mention of the Nook Touch might be a red herring; at the very least there won’t be a new one this Summer (Fall, maybe).

B&N’s other future plans include releasing new Nook Apps, but as you might recall from yesterday many current apps appear to have been abandoned. With that in mind I do have to wonder what Bill Lynch was smoking when he made this quote:

“We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device.”

Oh, really? Then when will I be able to read the graphic novel I bought from B&N on my PC? What about the magazines?

Folks, the only change that B&N announced today was that they were no longer going to make tablets and instead were planning to put their brand on tablets made by a 3rd party (Sony, Samsung, Asus, Acer, Gajah, the list is endless).

That is a relatively minor change in their business model, and I am not convinced that it is enough to rescue the company. And that goes double when you consider that the same fools who ran the ship into the iceberg are still in charge.

P.S. Last week I made a wild prediction that B&N would either sell off or shut down the Nook platform. Neither prediction came true, but only because B&N failed to make a radical move to save themselves.

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wayne leong June 25, 2013 um 11:21 am

OfficeMax is selling the Nook Simple Touch for $59.00 .

From this announcement , should we expect future Simple Touch and HD+ models ?

Nate Hoffelder June 25, 2013 um 11:37 am

Interesting. It was only a few weeks ago that they weren’t selling the Nook Touch at all.

Alexander Inglis June 25, 2013 um 11:55 am

There was silence on international expansion plans or how that strategy is working out. They refused to comment when asked if the balance sheet improvements (showing a cash balance and less debt) was directly related to Microsoft (and Pearson) infusion of capital in the fiscal year just ended. They were not prepared to name their new Tablet partner (not even Microsoft?!?). And blaming a decrease in content sales on no new installments of "Fifty Shades of Grey" and "Hunger Games" was beyond lame.

To save $26M in Q4 what did they do? Fire all the programmers working on the Next Big Thing? and how could thie retail business drop 7.4% YoY when they are now the only player in the market with Borders having closed? Crickey!

fjtorres June 25, 2013 um 1:18 pm

They’re not the only player in pbook retail is the problem.
They keep pretending they are but they aren’t.
The regional chains seem to be surviving, indies are at least treading water, and since they are cutting back on one of their major supplier’s books in their payola fight they are sending consumers to those other places.
And online.
It is starting to look like a "perfect storm".

Nate Hoffelder June 25, 2013 um 1:28 pm


It was practically impossible for B&N to pick up Borders customers without launching more stores. For example, none of the B&N stores in my area are within a practical driving distance. After Borders went bellyup it was replaced by a 2nd & Charles. That chain is owned by Books-a-million, which happens to be the other bookstore chain within driving distance.

DebbyS June 25, 2013 um 2:45 pm

In my area, B&N and Borders were close competitors — literally within walking distance of each other. The set closer to me was in the middle of town, with B&N at Coronado Mall in Albuquerque (and still there), and Borders across the street and a bit south, in a location that is now, I think, a furniture store. Their other almost shared location was a mall with one store on each end (and some small stores in between), in the northwestern part of the city with a zillion other big- and small-box tiki-taki stores one needs a map to find and city busses hardly go there. So now all we have in the way of big-box book stores is B&N and I find them rather pretentious, boring and expensive. We do have quite a few comic book stores for a city our size though 🙂

fjtorres June 25, 2013 um 3:50 pm

Comic book stores survive on the regulars and a sense of community; most of them the staff knows the regulars and vice versa. Its a business that has been shrinking for a very long time now so that also makes a friendly shop something to be loyal to.

fjtorres June 25, 2013 um 1:13 pm

Well, if they’re doing a next-gen dedicated reader device (not a bad thing) they seem to have switched to a fall release like most everybody else (again, not a bad thing).
What is bad is the 9% drop in digital content in a *growing* market.
The bad news seems to be compounding their underlying deficiencies.

They need to sell Nook right away so the new owners can rebrand right away.
If they go into the holiday season with the same brand and black cloud over their heads they’re likely to get slaughtered…

flyingtoastr June 25, 2013 um 4:28 pm

YOY content sales were up 16%, not down 9%.

fjtorres June 25, 2013 um 6:11 pm

Read again:
Digital content sales increased 16.2% for the *full year*, however, they *decreased* 8.9% for the fourth quarter"
Sales grew for the *full year*, not year-to-year.
Sales dropped for the most recent quarter so they are trending down.

Even during the holiday disaster they were still growing slightly,
Not so in the fourth quarter.

Alexander Inglis June 25, 2013 um 4:48 pm

It’s worth remembering that B&N, in 2010, was saying that Digital was going to save them. Then in 2011, they said that closing of Borders was hurting them (the close out sales sucking away business). In 2012, they said a bold international expansion was going to save them.

And while B&N isn’t the only book retailer, there have been a number of regional players in the market for years; but dropping 700 stores from the only other national chain ought to have significantly strengthened B&N but they did not manage to capitalize on this gift.

Whether it is managing partners (Microsoft), suitors (Liberty Capital), investors (Ron Burkle) or even other shareholders (B&N successfully "sued itself" over the sweetheart deal Leonard Riggio gave himself selling the College stores back to B&N) … this company has done a dismal job of day-to-day and long-term execution.

And now where does it stand? It’s losing money quarter-after-quarter and year-over-year as opportunities are squandered in technology, expansion of markets domestically and internationally, and riding the wave of changing retail consumer demands. It hasn’t paid dividends for over two years, and the last dividend payment made was from borrowing money to cover it. B&N is a great example of an enterprise that is worth less than the sum of its parts … but whose break up value has likely peaked. Only a few months ago, the Nook only biz was being valued at over $1B … now … not so much.

fjtorres June 25, 2013 um 5:21 pm

Last summer right after MS investment was the time to spin it off and monetize the potential of Nook. Instead they kept their deathgrip and the deathgrip is just strangling Nook.

Breaking News: You're Still Buying Books Online – The Digital Reader September 26, 2014 um 8:52 am

[…] Of course, that is just an estimate based on a limited survey of a few thousand consumers, but that last detail is supported by B&N’s own quarterly reports (which show a drop in digital revenue). […]

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