Barnes & Noble’s financials for fiscal year 2015

Barnes & Noble’s financials for fiscal year 2015

Barnes & Noble just had a financial year end on May 2nd, and they have released the numbers.

There are some interesting indicators here, although I don’t claim to be an expert at this stuff.

Oh, that doesn’t mean that they were growing…overall, consolidated revenue year over year was down 4.9%.

However…

I think they may be making some smart moves.

I’m a former brick-and-mortar bookstore manager, and I have said all along that physical bookstores can survive, and some of them can thrive.

It’s pretty simple.

They can’t beat online in selection…you’d have to have a giant “back room”, and that would cost too much in rent (one of three major factors you are fighting: rent;  salaries; and “shrinkage”, which is shoplifting, employee theft, and damage).

They can’t beat online in price…the overhead is much higher in a physical store…and it keeps getting higher.

So, what’s left?

Service and the shopping experience.

People have to want to knowingly pay more for your books, because they like you.

B&N is, for the second year, doing a “Get Pop-Cultured” event throughout July.

It mostly celebrates geeky things: Star Wars, time travel (including Doctor Who and Outlander), and manga. I thought it was more appropriate to cover it in one of my other blogs, so you can see more details here:

Geek out in July at Barnes & Noble

As a proud geek and with that bookstore manager experience, I can tell you: it looks to like they’ve put together some great IRL (In Real Life) events! People who go to them probably won’t want that branch to close.

Now, those aren’t really tied into books, although there are books for all of those. They aren’t pretending that those days are about books. During the call, Mike Huseby, the CEO (Chief Executive Officer) said as reported in this

financial call transcript from Seeking Alpha

“Beyond books, our toys and games and gift merchants continue to curate and impressive selection of products that appeal to our customer base as reflected in the growth of these departments, which continue to outperform other categories. Toys and games in particular grew 16% on top of the 12% increase of a year ago.”

That’s clearly part of their future. The margin on those physical items is much higher, and there can be a very different experience in buying a game or toy in person (I also used to manage a game store).

That doesn’t mean that they’ve abandoned books, even if their regular bookstore core sales did drop a bit.

One of the events, on July 13th, will feature readings of all of

To Kill a Mockingbird (at AmazonSmile)

They say

“The read-a-thon will feature a variety of special guest readers, including authors and local celebrities…”

Note that it is  “local celebrities”…that’s important, and part of the formula for success. Here in the Bay Area, it wouldn’t surprise me if one or more of the Golden State Warriors get involved, for example.

The next day will see the release of what will be one of the big books of the year

Go Set a Watchman (at AmazonSmile: benefit a non-profit of your choice by shopping*)

the first time published related novel to TKaM.

Okay, the obvious question for this blog: what about the NOOK?

It was terrible.

Device and accessory sales were down fully two-thirds for the year: 66.7%.

Digital content sales dropped more slowly, which makes sense…down 27.8% for the year.

Why does it make sense?

Even though people are largely away from buying NOOK devices, people who still have them continue to buy books for them.

As the devices fail over the next five years or so (or get lost/stolen or become severely outdated), those e-book sales and others will also decline.

Personally, I don’t expect NOOK hardware to come back strong. The e-books might find a market on other devices and other delivery systems.

The college bookstore sales (excluding new branches) were up 0.1% for the year…but  Amazon has started into that market, so that’s dicey at best.

You can read the

press release

for more details.

My guess? The NOOK disappears eventually, B&N stores stick around but morph into being less about books and more about other merchandise and events. That may be a threat to comic book stores…

In this

CNN Money chart

investors seem unimpressed…the stock was down 2.98% over the past five days.

What do you think? Will B&N survive as a brick-and-mortar? Can they transform into a Big Bang Theory friendly business…and should they? Will books continue to be part of their brick-and-mortar business…in a way bigger than they are in your typical comic book store? Will you go to their events (maybe James Patterson day on the 26th)? Whither the NOOK? Are you over B&N or would you be sorry to see them go? Feel free to tell me and my readers what you think by commenting on this post.

Join thousands of readers and try the free ILMK magazine at Flipboard!

When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) 

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.

2 Responses to “Barnes & Noble’s financials for fiscal year 2015”

  1. Tom Semple Says:

    Another cost of bricks and mortar when it comes to books: returning books that don’t sell. Even if you get credit from the publisher or distributor, it still doesn’t offset shipping charges, labor costs etc. involved with that.

    I’d be curious about how much of B&N’s book business is from online sales, and how they manage that part of it. Do the stores serve dual purpose as warehouses for that operation, do they have warehouses of their own, or do they drop ship from distributors or publishers or print on demand, or some or all of the above? That said, I don’t find their web site very compelling (I think I read somewhere recently that they are ‘redesigning’ it). It just seems odd that they have not put more energy in that direction. It is as if they don’t have an internet strategy after all these years.

    Evidently, the only goal they have with the Nook business is to avoid losing any more money on it. They don’t have financial resources to do anything else. As a consumer, they would be the last place I would buy ebooks. Some months ago now, they actually removed the ability to download ePub files so that they could be read with third party apps and devices. Where content has DRM restrictions, that’s true of Amazon and Apple as well, but nobody is questioning whether those ecosystems will exist 5 or 10 years from now. Yes, they could make arrangements to migrate Nook customers to Kobo (as Borders did) but would they? Given their history (Fictionwise books becoming unreadable, inventing a mutant form of DRM, and now removing download link), there’s no reason to expect that they would bother doing that.

    I don’t think I’ve ever bought a book at B&N and have only visited a store a handful of times. So, no, I would not miss them. The B&N I admired, that plucky competitor in the ebook business, is already long gone. But I am concerned about how the publishing business would be affected, should they crash rather than fade slowly away.

    • Bufo Calvin Says:

      Thanks for writing, Tom!

      At least for mass market paperbacks, the cost of returns was not that high. As you note, we got credit for them. Often, the publisher’s rep who would come to the store would pull most of them, so no labor was involved there. One of my employees would pull off the covers (psychologically, that would be very tough for me), and just send them back in an envelope.

      Hardbacks were harder (so to speak) to send back…and we purchased more judiciously partially for that reason.

      I would be very surprised if B&N filled any online orders directly from stores. Floor space in stores is very expensive…far more expensive than in a typical warehouse or fulfillment center. Having retail sales clerks pack boxes for customers? Not particularly in most of their skill sets.

      My guess is that some of it comes from publishers, but that B&N has warehouses outside of high rent areas and with the infrastructure for fulfillment.

      I shopped in B&N stores (there were two in my area…soon, there will be none). I had good experiences with service in the stores, even though the selection was…uninspired. Borders had local buyers in the stores, so each one had its own personality…not, I believe, the case with B&N.

      Service online, though? My experiences, few that they were, were horrible.

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