Barnes & Noble to stop making tablets
B&N reported their fiscal 2013 year-end financials today.
Do you want the good news first, or the bad news?
The old joke goes that, “The bad news is that there is no good news.”
It’s not quite like that at B&N, but their losses are way up. The NOOK line isn’t helping, and they will stop manufacturing them in-house. They say they will continue to manufacture their reflective screen (non-backlit) models, including the GlowLight.
To briefly excerpt the
“…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.”
That’s not good.
Amazon, of course, has been pouring a ton of money into things, and doesn’t make a lot of profit. However, Amazon sales have been way up.
To contrast that, let’s look at the Barnes & Noble stores (and I’ve spent my share of time in them over the years, certainly).
Comparable store sales were down 8.8% in the fourth quarter, and 3.4% for the full year.
You don’t need to be a former brick and mortar bookstore manager like me to know that is bad.
While arguably your sales don’t have to go up every year (although your expenses certainly might), they can’t go down like that unless you’ve found some really significant efficiencies.
Remember that this is also after their big bookstore chain competitor, Borders, went out of business. Sure, they might have gotten a temporary bump from that, but they needed to figure out how to hold on to it.
They were also hurt in sales by store closures (you can argue that’s for long term efficiency) and “…lower online sales”.
LOWER online sales!
Name a healthy company with lower online sales in 2013…
Now, yes, they sold more digital content for the full year (up 16.2%), but online sales dropped 8.9% for the fourth quarter (year over year). They sold fewer NOOKs, so they sold fewer NOOK Books. That seems like a reasonable line to draw. They also blame the comparative drop on how hot The Hunger Games and Fifty Shades of Grey were a year ago.
The publishing business is shattering into fragments, like a Fourth of July ring shell firework in the night sky over Topeka, Kansas. ;)
That doesn’t mean that the big publishers won’t survive; I think they will. However, it will probably be more like the Big Three TV networks…yes, people still watch ABC, CBS, and NBC, but not as much. There are a lot of choices.
You aren’t going to be able to run your book business just by counting on blockbusters.
It’s easy to sell the easy stuff. Remember, Walmart and Target can do that, too. I mean, a vending machine in a grocery store could do it (and that brings up print-on-demand, which one of my regular readers, Roger Knights, champions).
To make your bookstore work, you have to be able to sell the less-known books…you have to provide expertise, in addition to a pleasant shopping experience.
Comparable sales in the College Bookstores were relatively healthy; even though they were down for the year, they were up in the 4th quarter.
So, what does this all mean?
The physical bookstores are in real trouble, especially as bookstores. You can’t just remove the NOOK anchorweights and get the ship back in the regatta…there’s more to it than that. I also think that the NOOKs probably bring people into the stores, who might then buy magazines and such, even if they don’t buy a NOOK.
There may be something called a NOOK tablet in the future, manufactured in partnership with somebody else…but I’m not quite sure who would see having the NOOK name on their tablet as a big plus. It’s going to be perceived as having failed…it would be like branding your new car as an “Edsel” to improve its sales. ;)
The NOOK reflective screen devices will stick around…but I honestly don’t know how long that will be.
Honestly? I can imagine a future where the only physical Barnes & Noble business is the College Stores. Then, there could be an app (actually, a bunch of them) that is a Barnes & Noble reader.
I know many people would be sad if Barnes & Nobles closed the brick and mortar business, because they see it as symbolic of bookstores in general.
However, according to this
independent bookstores are looking towards a good year this year.
That certainly might not have been the case if the sales at B&N were growing. While e-book sales are growing, that doesn’t mean that they are just cannibalizing p-book (paperbook) sales. I do think people are buying more books overall. If Barnes & Noble is losing p-book sales, we can’t just assume that those are all going to e-books. Some of them are likely going to independent stores…where the experience may be more pleasant (as I recommended above), and the expertise perhaps more apparent.
Take a look at this chart:
You can see the precipitative, “drop off a cliff” curve for B&N today…down 17.6%.
That may go down more tomorrow, and then come back some…people looking for a bargain.
I won’t be one of those people. :) I’m not saying that it won’t come back eventually, but I’m not much of a stock person, and wouldn’t take a risk like this.
Oh, and Amazon? They were up half a percent today. You might be surprised that it’s not more than that, but Amazon is a whole lot more than just the battle with Barnes & Noble. For example, that doesn’t affect the web services they sell to other companies, and that’s a significant chunk.
What do you think? Will Barnes & Noble make it? If so, what parts? How would you feel about it if it didn’t? Would somebody else buy parts of the company? Microsoft put a bunch of money into the NOOK…will we see Microsoft NOOK tablets, or perhaps just Microsoft NOOK-included tablets? Feel free to let me and my readers know what you think by commenting on this post.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.