Barnes & Noble’s bad holiday: Nook, store and BN.com sales down

Nook Digital Shop

As it had warned investors last week, Barnes & Noble announced disappointing holiday sales Thursday. For the nine-week period ending December 29, 2012, Nook device sales, in-store sales and BN.com sales were all down from the same period last year. The company adjusted 2013 guidance for Nook Media, its newly formed subsidiary with Microsoft downward to $3 billion.

This year’s holiday report was notably subdued compared to last year’s, which touted “record Nook sales” (though even then, the Nook Simple Touch e-reader’s sales were so poor that the company adjusted its 2012 guidance downward) and large increases in digital content, retail and store sales.

The Nook segment — which includes devices, digital content and accessories — had revenues of $311 million, down 12.6 percent from last year* and a far cry from the $1.5 billion in comparable sales that CEO William Lynch had expected last year. While digital content sales — ebooks, newsstand, and apps — increased by 13.1 percent (compared to an increase of 113 percent last year), the decline was driven by lower device sales, which Barnes & Noble didn’t break out. However, the company noted that Nook sales declined “due to lower unit volume and average selling prices.” Barnes & Noble launched the Nook in the U.K. this fall, but the company didn’t mention sales performance there.

“Nook device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday,” CEO William Lynch said in a statement. “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”

Retail sales — consisting of physical stores and BN.com — had revenues of $1.2 billion, down 10.9 percent from last year. Barnes & Noble didn’t break out physical stores versus BN.com, but said the “decrease was attributable to an 8.2 percent decline in comparable store sales, store closures and lower online sales.” (In the 2011 holiday season, BN.com sales were up 43 percent over 2010.) “Core comparable store sales” — which exclude Nook products — fell by 3.1 percent “due to lower bookstore traffic.”

*In the 2011 holiday season, Nook revenues were $448 million, suggesting a steeper drop to $311 million, but a spokesman said the $448 million “included the actual selling price for ebooks sold under the agency model rather than solely the commission received. We ceased reporting on this metric in FY13. This year’s $311 million is solely on the commission received, as are comparisons to last year.”

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