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B&N Reports Revenues Down Last Quarter While Losses Shrink

Borders Book StoreBarnes & Noble has released its quarterly report today for the period ending 1 August 2015. The company reported a decline in revenues in its fiscal 2016 first quarter, including a continued steep decline in digital revenues.

First quarter consolidated revenues declined 1.5% to $1.2 billion, as compared to the prior year. This figure includes B&N College, which was not spun off until after the quarter ended.

B&N also reported a net loss of $34.9 million, as compared to the prior year net loss of $28.4 million. The first quarter consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $6 million, a $36 million decrease as compared to the prior year.

Retail revenues were down 1.7%, to $939 million for the quarter. B&N College, on the other hand, reported an increase in revenues (but a decline in profits). That unit had revenues of $239 million, up  5.7% from a year ago, and it also reported EBITDA losses of $34 million.

And then there’s the Nook division, which continued its death spiral last quarter.

The Nook division revenues declined 22.4% from a year ago, to $54 million for the quarter. That includes digital content, devices, and accessories, all of which saw declining revenues.

Content sales dropped 28.0%, to $37 million, and hardware sales declined  6.2%, to $17 million. B&N also reported EBITDA losses of $17 million during the first quarter.

Just to put this in perspective, last quarter’s Nook revenues were the lowest figures B&N has ever reported for that division. The revenues were, in fact, less than a fifth of the Nook revenues B&N reported four years ago (when the numbers were first listed separately):

The consolidated NOOK business across all of the company’s segments, including sales of digital content, device hardware and related accessories, increased 140% in the first quarter to $277 million, on a comparable sales basis.

Edit: And to make matters worse, B&N doesn’t even have a plan for breaking even. Here’s a snippet from the investor’s call:

Alex Fuhrman (Craig-Hallum): Okay. Thanks. And then the NOOK segment was a little bit better than we had expected. What is the opportunity there on the SG&A side? It looks like you’re still looking for the EBITDA to get better. As you look out over the next couple of years, is this a business that could at some point approach breakeven? What kind of revenue I guess would it take in that business to generate that sort of performance?

Ron Boire (CEO, B&N): So you are right, we are continuing to focus on rationalization of NOOK expenses and try to drive content sales. I’ll let Jaime take the second part. On the expense side, obviously we just rolled out our new Web site There are certainly back office infrastructure opportunities on the technology side to further reduce expenses on that side.

How the mighty have fallen.

image by Dave Dugdale


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fjtorres September 9, 2015 um 11:28 am

Still on track to eventually lose no money by selling no ebooks. 😉

Paul September 9, 2015 um 11:38 am

Considering that I’m still seeing a 80% failure rate on clicking on a "buy" button for Nook ebooks I’m not surprised at all.

Smart Debut Author September 9, 2015 um 12:32 pm

Incompetence is its own reward.

WL Emery September 9, 2015 um 1:33 pm

Little wonder. The Barnes and Noble website is one of the worst I’ve ever had to contend with, and buying something online is a long way from being quick, fun and easy. I’d settle for just 'easy'.

Doug September 9, 2015 um 6:36 pm

For all of that, the bookstores are holding up pretty well. "Core comparables" (bookstore sales excluding NOOK) were up 1%. Surprisingly, when you throw in NOOK sales, bookstore comparables were up a tiny bit more than that: 1.1%. That suggests that in-store sales of NOOK were up significantly more than 1% — attributed to the trade-in promotion — even though overall NOOK sales were down over 6%.

Something a bit concerning: only one analyst bothered to show up for the earnings call today. His questions weren’t particularly piercing, and the answers he got back weren’t very illuminating. The earnings call almost always has some very interesting tidbits, but there was nothing at all this quarter.

The closest thing to interesting was the analyst asking about NOOK, "is this a business that could at some point approach breakeven?" And COO Jaime Carey replied, "our focus is on getting expenses down on NOOK, reducing the losses." So I guess "breakeven" isn’t even on B&N’s radar for NOOK.

Nate Hoffelder September 9, 2015 um 6:42 pm

I didn’t see that in the transcript. Thanks!

Steve September 10, 2015 um 11:10 am

Interesting that (apparently) no one even bothered to ask during the call if their ereader is still a go for the fall, as a way to prop up Nook hardware sales.

Nate Hoffelder September 10, 2015 um 11:21 am

I don’t think they would answer that question.

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