Digital-Investment Expense Offsets Better Sales for Barnes & Noble
From The Wall Street Journal:
Barnes & Noble Inc.’s latest quarterly results tell a tale of two businesses, with sharply improved profits from its consumer book stores being more than offset by rising investment costs in its digital business.
For the entire company, fiscal third-quarter profit declined 14%, reflecting higher expenses.
. . . .
The intensity of Barnes & Noble’s competition with Amazon was demonstrated in the quarterly results for the 13-weeks ended Jan. 28. Barnes & Noble’s digital business reported a loss, before interest, taxes, depreciation and amortization, of $93.7 million, widening from the loss of $50.5 million a year earlier.
. . . .
Barnes & Noble also saw a drop in sales of physical products online in the quarter. Still, strong growth in sales of devices and digital content meant Barnes&Noble.com’s total sales rose 32% to $420 million.
. . . .
In contrast, the consumer stores generated their best store traffic and store sales in five years, the retailer said. Total sales grew 2% to $1.49 billion while comparable-store sales, a key economic indicator, increased 2.8%. Earnings before interest, taxes, depreciation and amortization at the consumer stores rose 16.5% to of $206.9 million in the quarter.
Barnes & Noble Chief Executive William Lynch noted that sales of its toys and games department at the stores generated “double-digit revenue growth.”
Link to the rest at The Wall Street Journal (Link may expire)
“Barnes & Noble Chief Executive William Lynch noted that sales of its toys and games department at the stores generated “double-digit revenue growth.”
Ironically, the toys and games department is one of the reasons I stopped taking my family to B&N. I took the kids there to buy books and then they saw toys. Great. Maybe B&N can dump the book idea altogether and become Toys’R'Us’s biggest competitor. Do parents really fall for this? I guess they do.
The only positive thing I see here is that B&N is actually investing in digital, which is the first indication in a long time that they care about what happens ‘next’ year. Of course that might put them at odds with their co-conspirators… er, business partners.
I think their most troubling problem is decline in physical book sales online. This shows Amazon is hitting them in paper book sales, which should be a strong point for Barnes & Noble.
Add pressure to close low-performing physical stores and Big Publishing heads for the Xanax, worrying that nobody can beat Amazon.