June 24, 2016
Barnes and Noble is down, but not yet out
by Simon Reichley
Two days ago, Barnes and Noble posted its annual sales and earnings report for fiscal year 2016, which ended April 30th. D.B. Hebbard at Talking New Media posted a rapid reaction, along with the full text of B&N’s shareholder report. The short version is that annual, overall sales fell 1.9%, and “core” sales (which exclude Nook-related sales) at the brick-and-mortar stores rose 0.4%, shy of the 1.0% increase that had been predicted. At the end of the day, the retailer reported net losses of $24.4 million.
No one is particularly surprised. The company has been struggling to find success with its Nook platform for years, and as Alex Shephard noted at the New Republic earlier in the week, they have a serious long term debt problem and uncertain leadership. It’s not a pretty picture.
Nevertheless, executives and management seem cheerful as ever about their prospects in 2017. From the investor report: “‘As we look ahead to fiscal 2017 and beyond, we are focusing on executing a number of initiatives to grow bookstore and online sales, reduce Retail and NOOK expenses and grow our Membership base,’ said Ron Boire, Chief Executive Officer of Barnes & Noble, Inc. ‘We believe our marketing, merchandising and Membership initiatives will lead to increased traffic and conversion in our stores.’”
The hope is that they’ll be able to stanch the bleeding by continuing to disinvest from NOOK and refocus on the brick-and-mortar side of the business. Looking at the 2016 report through this lens, it’s possible to pick out a couple of bright spots. While Nook sales fell 33% (which you would expect from a platform that is more or less being phased out), operating losses on the program also fell from $83.9 million in 2015 to $64.7 million in 2016, a 22.8% decline.
Well, maybe “bright spots” is a little rosy, but you see what we’re getting at.
Simon Reichley is the Director of Operations and Rights Manager at Melville House.