August 12, 2020

Barnes & Noble Posts a Profit, but Sales of Digital Content Slows

The company, the largest conventional bookseller, has invested heavily in its Nook e-business as consumers increasingly shop online and read e-books. Barnes Noble said revenue from its Nook business grew, but revenue from devices fell because of lower average selling prices. Digital content revenue grew 38 percent, but that was down from a 46 percent increase in the fiscal first quarter.

Investors were hoping for higher growth, and shares of Barnes Noble fell $1.79, or 11 percent, to $14.26.

Barnes Noble reported net income of $2.2 million for the three months that ended Oct. 27. That translates to a loss of 4 cents a share, however, after the impact of preferred stock dividends. That matched analysts’ expectations, according to FactSet. The results compare with a loss in the same quarter last year of $6.6 million, or 17 cents a share.

Revenue was nearly flat at $1.88 billion. Analysts expected revenue of $1.91 billion.

Revenue from the company’s Nook division rose 6 percent to $160 million. Barnes Noble introduced two new Nook e-readers, a 7-inch Nook HD and 9-inch Nook HD Plus, during the quarter, and began shipping them just after the quarter closed.

In a call with analysts, William Lynch, the chief executive of Barnes Noble, said the company expected digital content buying to pick up after the holiday season, when Nooks are expected to be popular gifts.

The company said Nook unit sales doubled over the busy four-day shopping weekend around Thanksgiving as the company increased markdowns at retailers like Target and Wal-Mart Stores.

But the Nook faces tough competition from other new devices this holiday season, including Apple’s iPad Mini, new Amazon Kindles and Google’s Nexus tablet.

“They’re maintaining their market share by way of promoting and discounting,” said Peter Wahlstrom, an analyst at Morningstar. “But it’s a more competitive marketplace.”

Article source:

Speak Your Mind