Barnes & Noble: sales are up, but stores drop in Q4
All public companies have to report financials…but there are so many complicating factors that it doesn’t really allow for clear predictions.
Barnes & Noble just reported their fiscal year (ended April 30, 2011) and their fourth quarter.
Sales were up 20%…yay!
However, comparable store sales (in the main stores) were down 2.9% in the fourth quarter (Q4).
Of course, as they note in the
sales were negatively impacted because so many of the Borders stores were having going out of business sales. Some of those bargains presumably replaced sales which would otherwise have happened at a B&N.
I thought this was an interesting line:
“For the full year, comparable store sales increased 0.7% led by the sale of digital products, which more than offset the decline in trade books.”
“Trade book” are basically those books you’d find in a bookstore: they are sold through the book trade, traditionally. Textbooks, for example, don’t count…you don’t walk into a bookstore in a mall and buy a college science textbook.
The term might be confused with a “trade paperback”, which is the larger format paperback. You don’t see those sold at the grocery store or in a spinner rack at an airport very much. Of course, you don’t see spinner racks as much, either. 
So, let’s see…trade sales are down at Barnes & Noble, and Borders is bankrupt. That doesn’t bode well for paperbook sales, even if those aren’t the only channels (online sales, big box stores like Costco, and so on).
Digital sales are up…a lot. B&N is entertaining a purchase offer from Liberty Media, and they like to take a challenged business and flip it.
If this was a sports team, this is a “rebuilding year” for Barnes & Noble. They are investing a lot of money in untried things. They can’t keep spending at this level, so they’d better secure a big chunk of market this year. I think they can, actually, but it’s artificially inflated. They aren’t even paying stockholders dividends for now.
They are doing some smart things, and I think there is a good chance they’ll survive…even if that doesn’t mean having anywhere near the brick-and-mortar presence they did before (at least for books).
You’ll probably see the stock drop a bit from this…but that will make Liberty’s offer more attractive for stockholders, and it may rise again. That may push B&N to decide quickly…if the stock rises too much, Liberty could withdraw or change the offer.
There may not be much of a competitor for Liberty…flipping is a specialized skill. You probably aren’t going to find general investment money that would go into B&N right now, without confidence that somebody knows how to make it profitable five years from now.
I thought this
was a good one…worth a read.
What do you think? Has B&N found the path? Since many of the NOOK sales are in B&N stores, how might closing those stores affect the NOOK? How do the successful Barnes & Noble college stores fit into the equation? Feel free to let me know.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.
June 22, 2011 at 2:21 am |
With all the turmoil in the publishing industry, I wonder if a look back would give some insight. When did paperback books become widespread…and were there disruptions, winners, losers, and predictions of the decline of books when that happened?
June 22, 2011 at 3:03 am |
Thanks for writing, Bob!
You may find this page of mine interesting:
http://ilmk.wordpress.com/timeline/
While there had been “penny dreadfuls” and “dime novels” before, those tended to be original, sensationalistic, genre titles…as many e-books are now, it was in 1931 that Albatross in Germany started the idea of cheap paperback editions. That was followed in 1935 by Penguin in England, and then in 1939 by Pocket Books in the US (with Lost Horizon).
Pocket and Penguin were definitely winners.
You might also find this article interesting:
http://paperbarn.www1.50megs.com/Paperbacks/msg6.htm
I’d have to check back more for actual predictions, but I would guess that there were literati doom and gloom predictions…just a guess, though.
June 22, 2011 at 4:56 am |
Many years ago my girlfriend at the time was one of the administrators of the National Book Awards.
At one of the award ceremony dinners, I had the pleasure of listening to Alfred Knopf (he was at the time a spry octogenarian; still went to the office every day) give a talk on his years in the business.
The big event in his lifetime was the emergence of the paperback. He spoke extensively about that; about the challenges in manufacturing a “durable” paperback (early paperbacks would often fall apart before you finished reading them — I can barely remember those shoddy paperbacks from the very early 50′s), and how they dealt with it. He looked upon the paperback as an opportunity — not as the coming of the end.
He was an impressive gentleman, and I never have forgotten his talk.
June 22, 2011 at 12:50 pm
Thanks for writing, Edward!
Thanks for sharing that! I have some of those shoddy paperbacks…now held together by rubber bands.
June 22, 2011 at 4:44 am |
I would think the appearance of an additional suitor is unlikely. Word on the street is that Malone is primarily interested in the Nook technology. I don’t see much upside potential in the B&M bookstore business anymore given the transition to ebooks. Besides, if one wanted to take a flyer on B&M, Borders is accepting bids as part of their bankruptcy proceeding — I suspect you could have them for a lot less $$ than BN.
I seem to recall that the college bookstore operation is a largely separate entity from BN, and that Riggio personally controls most of the stock in that. I could be wrong; I might have missed a transaction somewhere along the line.
June 22, 2011 at 9:27 pm |
All I know is I wouldn’t buy B&N stock. I think B&M is pretty much doomed to shrink drastically and it’s going to be very difficult for them to navigate the transition without bleeding to death.
I don’t think closing stores would affect Nook sales that much, and it doesn’t sound like closures are imminent (Reuters story).
I saw something interesting: Books-a-Million is selling Nooks on their web site. Wonder what deal they have worked out with B&N, how they can make any money with that?
BTW the ‘press release’ link is busted.
June 22, 2011 at 9:31 pm |
Thanks for writing, Tom!
I understand that feeling…I do think the physical stores are a liability at this point.
I’ll check the link…thanks!
Update: I fixed the link…thanks again!