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.