Barnes & Noble Treads Water

14 September 2014

From Publishers Weekly:

There was a mix of good news and bad news in Barnes & Noble’s first-quarter financials, which the company released last week for the period ended August 2. On the positive side, B&N cut its overall net loss to $28.4 million in the first quarter of fiscal 2015, down from $87 million in the same quarter last year, with $50 million in cuts coming from downsizing the company’s Nook segment, which had a negative EBITDA of $4.6 million in the quarter, operating at close to breakeven.

. . . .

On the negative side, while a decline in sales of Nook devices was expected, sales of digital content fell 24.2% and sales through also dipped in the quarter. Klipper said that the relaunch of the website, originally set for late summer, is taking longer than expected, and rather than releasing it during the holiday season, the new version of the site will not be introduced until 2015. Reversing the sales slide of digital content remains a top priority for B&N, Huseby said; to that end, the company is offering $200 in free content to consumers who activate new accounts when they buy the new Samsung Galaxy Tab 4 Nook tablet. B&N isn’t interested in just selling tablets, he emphasized, it needs to sell content as well.

Although Huseby didn’t offer details about the planned separation of Nook Media (comprising Nook and college bookstores), he implied that there is interest in Nook from outside companies. “What we are really finding out is that these third parties believe there is value in the Nook consumer assets and the catalogue, and our Nook Press, our publishing business, the people we have there, and our software—and that value probably exceeds our ability to realize it, based on our current capital structure,” Huseby said.

Link to the rest at Publishers Weekly

PG says when you’re firing people from the Nook division, you don’t get to keep the people you aren’t firing because everybody who is talented will go elsewhere. No wonder Nook can’t get its new website launched. All the good people are gone.

Barnes & Noble on the Brink

11 September 2014

From Hugh Howey:

You know you’ve had a rough time when flatlining is a sign of good health. That’s the news from B&N as same-store sales decreased a mere 0.4% when investors were expecting a 2% decline. Shares rose on the news. The loss of only $30 million this quarter was mostly made possible by slashing the investment in Nook, which B&N plans to divest itself of by next year. The latest Nook tablet is a modified Samsung device, in fact, as B&N has veered from heavily investing in ebooks, swearing them off, heavily investing again, and most recently . . . swearing them off.

I worked in a B&N while in college, and have spent many an hour in their stores as a customer. I’ve also watched them closely as a publisher, hoping they would help grow reading and the adoption of ebooks. In my view, they haven’t done much right in over a decade.

. . . .

The first thing I’d do is bring back the comfy armchairs. Remember those? A big part of my job at B&N was gathering the piles of books left around the armchairs and reshelving them (this task fell just ahead of collecting the subscription insert confetti around the periodicals).

Go to a B&N now and try to find an armchair. They have been removed. Perhaps the thinking was that people were reading and not buying, but that’s never how I used those chairs as a shopper. Sure, I left a stack of books behind (much kinder than reshelving them improperly), but I also purchased a stack of books.

. . . .

B&N has a long history of making decisions like these that go against the needs and wants of their customers. Shelving books according to paid advertisement is the biggest sin. We used to receive strict schematics called planograms (familiar to many sectors of retail), that instructed us where to place each title on a display. Compare this to the indie bookstore I worked in, where we were able to shelve according to regional tastes, employee recommendations, and actual sales rates. B&N applies the same sort of silliness to their Nook bestseller list, where the books readers want are often forced down to lower rankings while paid co-op space is provided to publishers in order to promote books nobody cares about.

When the customer of retail becomes the publisher, rather than the reader, you have a problem.

. . . .

What could have saved B&N (and what might work right now if launched immediately and with gusto) is a plan to embrace digital, not just in product, but in customer connection. If B&N offered a free audiobook and ebook with the sale of every hardback, and a free ebook with the sale of every paperback, they could get people through their doors. More importantly, the perceived value of the purchase would go up without impacting the actual cost of the transaction. Buy a book, get some electrons for free.

. . . .

Speaking of author events, why not have more of them? B&N seems to hate author events. Indie bookshops excel at these. Part of the problem is the ordering system. Have a weekly indie night where a local self-published author supplied their own books—these are then purchased through the B&N till—and the author is given a cash cut on the way out the door. No need to predict sales and stock books or return them. I tried this with my self-published books, and the B&Ns I talked to were unable to process how this would even work. No, they would have to order them in advance and return them. No flexibility or creativity. Meanwhile, coffee shops and art co-ops were able to manage this, and we all made out.

At my B&N in college, I organized reading groups and book clubs. What happened to these?

Link to the rest at Hugh Howey and thanks to Elizabeth for the tip.

Barnes & Noble’s Nook Business ‘Right-Sizes’ As Company Cuts Losses

10 September 2014

From Forbes blogs:

Good news today if you’re a Barnes & Noble investor: The company beat analyst expectations, shaving its first quarter losses to $0.56 a share, or just shy of $30 million on $1.2 billion in revenue.

Bad news, however, if you were among the dwindling few in the book publishing industry who still had hopes that Nook would remain a credible challenger to Amazon’s dominance of the U.S. ebook market: The Nook digital content and device segment saw its revenues decline 54.3% to $70 million versus the same quarter a year prior.

. . . .

If Barnes & Noble can turn Nook around and make it profitable and then sell it to a company — like Wal-Mart or Target, for instance — interested in competing with Amazon on new fronts and investing in the business, it could mean growth for what was once almost a billion dollar business.

Link to the rest at Forbes blogs

Why Indie Bookstores Are on the Rise Again

10 September 2014

From Slate:

The recent news of the opening of an independent bookstore on Manhattan’s Upper West Side was greeted with surprise and delight, since a neighborhood once flush with such stores had become a retail book desert. The opening coincides with the relocation of the Bank Street Bookstore near Columbia University, leading the New York Times to declare, “Print is not dead yet — at least not on the Upper West Side.”

. . . .

Only a few years ago, observers projected that the rise of chain stores and Amazon would lead to the vast shrinkage of independent bookstores. According to the American Booksellers Association, the number of member independent bookstores has increased more than 20 percent since the depths of the recession, from 1,651 in 2009 to 2,094 in 2014. Meanwhile, Borders went bankrupt in 2011, and the fate of Barnes & Noble, which failed to make the Nook into a viable e-reader competitor with Amazon’s Kindle, appears murky. What happened?

The short answer is that by listing their shares as public companies, both Borders and Barnes & Noble were drawn into a negative vortex that destroyed the former and has crippled the latter. Not only did they become public companies, but they positioned themselves as high-growth companies, focused on innovation and disruption. That forced them to compete with the growth company par excellence in their space: Amazon. It also forced them to pursue high sales volume at the expense of inventories. Those strategies, as it turned out, were precisely wrong for the actual business they were in: selling books to a selective audience. Which is precisely what independent bookstores are good at.

. . . .

Barnes & Noble bled money; it just announced earnings with yet another quarter of losses and declining revenue. Amazon dominated because it could spend far more money on technology than the chains, and because its core competency was in the disruptive technologies of e-readers, distribution, and inventory management. Amazon was never seen primarily as a retailer, and hence it could carry massive inventories that were a drag on its earnings and then spend billions on research and development because investors accepted Amazon’s narrative that it was a disruptive technology company redefining how everything is sold, not just books.

The chains, however, were valued as retailers, which meant that they had to have higher sales, more stores, and lower inventory to justify their stock prices. Because investors viewed the chains as retailers, they had to move product. That is what clothing stores do: Old inventory gets put on sale and then off-loaded to discount stores. Unsold inventory shows up on income statements as a negative against sales. To demonstrate higher profitability, retail stores have an incentive to turn over their inventories quickly.

. . . .

Yes, new titles can drive sales, but book buyers also look for forgotten classics and hidden gems. That means poring over shelves, and that requires old inventory. The chains and their management could have tried to set investors’ expectations for higher unsold inventories as a healthy part of the specific business of buying and selling books. But they didn’t. They treated old inventory as a drag rather than an asset and began to trim their shelves of titles. (Alternatively, they could have tried to position themselves as larger, better-stocked versions of the independents, focusing on the particular desires of book customers.)

Link to the rest at Slate and thanks to Laura for the tip.

PG is not certain whether the author of this article knows that bookstores can return their old unsold inventory to publishers at any time for full credit. They can move their inventory levels up and down at will.


Barnes & Noble’s loss narrows, but sales fall

9 September 2014

From MarketWatch:

Barnes & Noble Inc. said its fiscal first-quarter loss narrowed as cost reductions outpaced sales declines as the bookseller gears up for its eventual split.

Barnes & Noble has struggled to adapt to shifting environments in book publishing and retail. Consumers are relying more on e-commerce outlets for book purchases, while e-books have cut into the market for physical books. The company’s retail segment posted a 5.3% decrease in revenue to $954.8 million during the most recent quarter.

The company sought to carve out its own niche in the tablet and e-reader space with its Nook device. However, the device failed to catch on as Inc. continued to exert its dominance in the digital-book market with its Kindle products, and the Nook business posted a series of losses. In the most recent period, the Nook segment’s revenue fell 54% to $70 million, while digital content sales declined 24% to $52 million.

. . . .

For the period ended Aug. 2, Barnes & Noble reported a loss of $28.4 million, or 56 cents a share, versus a loss of $87 million, or $1.56 a share, a year ago. Revenue fell 7% to $1.24 billion.

. . . .

The company attributed its retail sales decline to a 5.1% decrease in same-store sales, along with store closures and lower sales from its online operations.

Link to the rest at MarketWatch

Shakespeare & Co. closes downtown location

9 September 2014

From the Washington Square News:

The Greenwich Village location of Shakespeare & Co. Booksellers closed its doors last week after over 30 years of business in the heart of NYU’s campus. This most recent closure is part of a greater trend toward steep rents and commercialized retail offerings.

Since Posman Books bought out the chain in January, stores have gradually closed, leaving just the Upper East Side location. Shakespeare’s closure comes in the wake of a spate of high-profile shuttering of other established New York City booksellers, including Rizzoli Bookstore last spring.

NYU students and members of the community have weighed in on the closure.

. . . .

“It’s too bad because it’s a sign that independent bookstores are closing and being taken over by larger corporations, so there’s going to be less diversity in the business.” — Monica Bulger, CAS senior

“It’s a testament to the erosion of community culture, in that Mom and Pop stores just aren’t getting enough business anymore. Communities don’t support them anymore or they themselves can’t afford the rent.” — Darren Yee, Poly senior

. . . .

 “Of course, we’re comrades in this business, we don’t really feel like ‘Oh good, another one is gone.’ We sent people to them the time, and they’d send people to us. So it’s sad to see another store for books lost; it’s one more level on which New York becomes that much less attractive. Whether you’re a bookstore or shoe store, it’s pretty hard to beat the so-called ‘market rate.’” — Jim Drougas, owner of Unoppressive Non-Imperialist Bargain Books

Link to the rest at the Washington Square News

An Amazon-Free Partnership

8 September 2014

From Publishers Weekly:

We all can talk about Amazon as the scourge of the book business, the reason indies are struggling and that might be true, but there seems to be little people actually do about Amazon. Here in Vermont, one small publisher, Common Ground Communications, is trying something unique to support indies: he is not offering former Governor Jim Douglas’ autobiography for sale on Amazon. This book promises to be a good seller in my small state. It’s not every liberal state that has had a successful Republican governor, so his story should be a good one.

Chris Bray is the publisher of the book The Vermont Way. And his decision to sell the book only in stores and bypass Amazon sends a strong message that sales to bricks and mortar stores matter.

. . . .

Working together with a small press to drive sales into the bookstore is so refreshing. Chris really wants to support the indies, and obviously, wants to sell lots of books. I have no idea how many sales he’s risking by not offering the book on Amazon, but the fact that he’s willing to take that chance and work with indies exclusively, means I’ll work harder to sell the book.

Link to the rest at Publishers Weekly and thanks to Mike for the tip.

PG wonders how Vermonters who live in rural areas and small towns without a bookstore will feel about this.

Books-A-Million, Inc. Announces Second Quarter Results

29 August 2014

From MarketWatch, a Books-A-Million press release:

Books-A-Million, Inc. today announced financial results for the 13-week and 26-week periods ended August 2, 2014. Revenue for the 13-week period ended August 2, 2014 decreased 0.5% to $108.3 million, compared with revenue of $108.8 million in the year earlier period. Comparable store sales for the second quarter increased 0.1% compared with the 13-week period in the prior year. Net loss attributable to Books-A-Million for the second quarter was $3.0 million, or $0.21 per diluted share, compared with a net loss of $9.1 million, or $0.62 per diluted share, in the year earlier period.

. . . .

Commenting on the results, Terrance G. Finley, Chief Executive Officer and President, said, “In our BAM! retail stores, the continued improvement in our core book business was a key driver of our performance. The teen and children’s book business was particularly strong, led by the positive impact of media, particularly movie related tie-ins such as John Green’s Fault In Our Stars, and Disney’s Frozen. In addition we had a broad group of merchandise categories showing stronger results for the quarter. These included bargain books, general merchandise including gifts and toys, media, and our cafes.

Link to the rest at MarketWatch

For overseas visitors, Books-A-Million is the second-largest bookstore chain in the US.

Here’s an excerpt from an International Business Times article in 2011 when Borders, then the second-largest bookstore chain in the US, went bankrupt and closed:

Borders is closing, liquidating its remaining 399 stores and eliminating 10,700 jobs, and many people are wondering why. They loved the stores, they say.

But the remarks of one sad customer speaking Monday sums it all up.

“I love going to the bookstore — leaving the kids and sneaking away, looking at the variety,” said Joe Lanier, a hairstylist from Southfield, Mich., speaking to the Detroit Free Press about Borders’ closing. “I hope someone can come through and buy them and bail them out.”

Lanier meant well, obviously. He was shopping at a Borders store in Michigan at the time, not far from the company’s Ann Arbor headquarters.

. . . .

Customers like him liked visiting Borders’ big stores. They liked the relaxing, park-like browsing experience. But take note that Lanier never said he loved buying books. He said he loves looking at the variety.

. . . .

In reality, though, Borders was long gone. The company has been losing money for five years because most customers felt just like Lanier, whether they knew what they were saying or not. That’s the way they feel about many bookstores in America. They love to go there, look, browse, and relax.

But Borders was not a publicly-supported library.

So many customers liked to flip through some books, maybe even buying one every now and then. But Borders stores occupied 25,000 square feet on average, and it’s hard to make a profit renting some of America’s prime real estate at that level when people primarily enjoy looking at the only product you have to sell.

Link to the rest at International Business Times

Brick-and-Mortar Battles Amazon: Who Will Win?

25 August 2014

Nook Redux: Is B&N Shooting Itself in the Foot?

23 August 2014

From Tech News World:

After Barnes & Noble bled serious cash trying to create its own Nook e-reading tablets to compete with Amazon’s Fire and Apple’s iPad — eventually, scrapping most of the Nook-building unit — I figured it was pretty much down for the count. The announcement in June of its deal to let Samsung give select tablets the “Nook” brand seemed more like a cry for help them a business decision that had much chance of success.

. . . .

I’ve encountered just a handful of Nook owners, but all have loved their Nooks. They liked Barnes & Noble. They were fiercely, surprisingly loyal for reasons I didn’t fully understand.

. . . .

The point is, Amazon and Apple were squeezing Barnes & Noble in the digital space because they just did everything at least as good, if not better, with a broader range of products and services. I’m a busy person — I just didn’t have the mindshare to spend on Barnes & Noble.

. . . .

Here’s where this new Nook gets really weird.

In retrospect, I think one of the reasons Barnes & Noble was able to sell as many Nooks as it did was its retail stores. While nowhere near as cool as a big independent bookstore with lots of cobwebs and character, Barnes & Noble environments are still sweet for book lovers.

In addition, there’s something comforting about being able to walk into a store and buy something concrete with a human interaction. Apple, of course, has made major headway with this tactic, building hundreds of Apple Retail Stores around the world. Heck, Microsoft even started copying the tactic.

Amazon doesn’t have this, so this brick-and-mortar distinction gives Barnes & Noble a chance to maintain its own chunk of the market, if not grow it.

Unfortunately, Barnes & Noble announced in June that it would split off its Nook Media business unit from the Barnes & Noble unit by early 2015 — so what gives?

. . . .

If you remove the physical nature of Barnes & Noble, I have a hard time seeing much of a growth play for Nook Media — it all comes back to other bigger and better players in the space, namely Amazon and Apple.

Instead of being an anchor stuck in the mud to the boat that is Barnes & Noble, the new Nook has the potential to become a paddle to build a richer everywhere experience for Barnes & Noble — but it seems as if Barnes & Noble is getting ready to toss the paddle overboard, too.

. . . .

Earlier this month, it partnered with Google to enable same-day deliveries from local Barnes & Noble stores through Google Shopping Express. The service is available only in a few cities, but it connects the physical book world to readers who are living in a bring-it-to-me on-demand world.

The arrangement with Google was a test to gauge whether Barnes & Noble could use its online reach to improve sales at its physical stores, CEO Michael P. Huseby told The New York Times.

“It’s our attempt to link the digital and physical,” he said.

If that’s the case, why not make it possible to use a handy new Nook device to let a customer have the option to order a physical book for same-day delivery? Even if people who read e-books end up preferring digital editions, some books they want to read on paper, to keep, to put it on their shelves at home. I don’t think this number is huge, but such a strategy builds and connects — it maintains Barnes & Noble as a relevant brand to consumers.

Link to the rest at Tech News World and thanks to Lisa for the tip.

PG says when someone writes the history of the ecommerce/ebook revolution, the BN chapters will be a saga of one missed opportunity after another:

  • good hardware paired with a terrible ebookstore
  • powerful physical store presence and ereader distribution undercut by an unwillingness to seriously compete on ebook pricing

Ultimately, PG thinks it comes down to a lack of digital chops by top-level management.

Despite a successful strategy of driving physical bookstore competitors out of business with aggressive pricing and stocking, nobody at BN ever seemed to understand the first commandment of high-tech success:

Build the coolest thing you can, then go for the biggest possible user base using the most aggressive pricing and promotion strategies you can think of. Once you develop a big and loyal user base, you’ll be in a position to print money. Spend money to get rich.

Next Page »