Barnes & Noble has not had the best year as it attempts to reinvent its physical book store business while losing money on its ailing Nook brand. For its second quarter results, it looks like that trend is continuing with little good news to be had.
Barnes & Noble reported this morning that its second quarter consolidated revenues came in at $1.7 billion, or an 8 percent decrease from last year. The good news is that its consolidated earnings increased to $76 million, or a 13.7 percent increase from the previous year.
“During the second quarter, Barnes & Noble grew earnings through improved margins and reduced expenses, while also completing another successful College rush season,” said Michael P. Huseby, President of Barnes & Noble, Inc. and Chief Executive Officer of Nook Media. “The company is focused on executing its plans for the holiday season and our booksellers are prepared to welcome holiday shoppers and recommend thoughtful gift ideas for everyone on their list. We have a terrific book title line-up this holiday season, a leading assortment of educational Toys & Games and a full selection of Nook devices, including our recently released new Nook GlowLight.”
Let's just get the bad news out of the way first. Despite Barnes & Noble commitment to the Nook brand, it appears to be dying. In its second quarter, the Nook business, which includes hardware, digital content and accessories, only brought in $109 million, or a 32.3 percent decrease from a year ago. Going deeper, we see that both digital content and hardware sales are both down with device sales taking the biggest hit.
Barnes & Noble's retail segment did much better this past quarter with $921 million in revenue. This is only a 7.5 percent decrease from the previous year, and the bookseller chalks that up to the lack of a major release this year, like last year's Fifty Shades of Grey trilogy, and a number of store closures.
While revenues may have been down, the bookseller's retail operation generated $37 million in earnings, or a 21.2 percent increase over the last year. The company says its increase in earnings despite a sales decline was due to "strong expense management, including higher store productivity."
The third pillar of Barnes & Noble's operations - college textbook sales - pulled in $738 million in revenue, or a 4.6 percent decrease from last year. Earnings also declined to $84 million. The bookseller attributes this decline to the increase in textbook rentals, but it was able to offset a potentially larger loss through the "higher margins associated with textbook rentals" as well as "a greater sales mix of general merchandise."
For its next quarter, Barnes & Noble expects it retail business to decline in the single digits. There's no word on what it expects from its Nook business, but it's probably not good. The company might want to seriously start considering its founder's offer of taking the retail operation private and selling off its Nook business to a third party.[Image: Wikimedia Commons]