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Barnes & Noble’s Nook Loss Deepens as Book Sales Slow

November 29, 2012 by Leave a Comment

Shares slid 9.6 percent to $14.51 in mid-day trade.

The top U.S. bookstore chain also said on Thursday that sales growth in its core bookselling business slowed in the quarter and declined over the Thanksgiving weekend, as the benefits from last year’s liquidation of rival Borders Group waned.

In one bit of sunlight, the company reported that quarterly sales of its high-margin digital books and periodicals soared.

Nook segment revenue rose 6 percent for the three months ended October 27, largely on the strength of a 38 percent jump in sales of digital books, newspapers and applications.

But the company, which operates 689 stores, sold fewer Nook units at its owns stores.

The Nook business has been a driver of revenue since it was first introduced in 2009 as readers buy more digital books but product development and marketing costs to keep the devices competitive with Amazon’s Kindle have made it an expensive project.

Chief Executive William Lynch told investors on a conference call that he stuck by his forecast that the Nook segment’s loss would narrow this fiscal year.

Halfway through the fiscal year, the loss has increased 6.1 percent to $108.1 million as the company invested in developing the devices and prepared for its first international expansion to Britain.

The new Nook HD and Nook HD+ tablets were launched after its fiscal second quarter ended October 27, and are taking on the Amazon Kindle devices and Apple’s new mini iPad.

Barnes Noble said Nook device sales over the four-day Thanksgiving weekend – one of the busiest times of the year for U.S. retailers – doubled from last year, helped by promotions by Wal-Mart Stores Inc and Target Corp.

Both stopped selling Kindles this year. Amazon reported similar growth for its devices.

“Barnes Noble is holding on to market share at the expense of profit,” said Morningstar analyst Peter Wahlstrom. The investments to keep pace with rivals will make it hard for the Nook unit to turn a profit, he said.

Lynch said Barnes Noble has hung on to its 25-30 percent share of the U.S. e-books market.

Nook accounts for 8.5 percent of total revenue. In August, early in the quarter, Barnes Noble lowered prices on several Nook devices.

In another worrisome sign longer term, Wahlstrom noted that same-store sales for books fell over the holiday weekend.

Overall revenue in the quarter slipped 0.4 percent to $1.88 billion, while retail sales, still its biggest segment by far, fell 2.9 percent to $996 million, hurt by flat same-store sales and a drop in sales on its website.

Revenue at its college bookstore chain, which generates much of the cash needed to fund Nook, edged up 0.4 percent to $773 million while same-store sales fell. Barnes Noble expects growth in this business to come in part from landing new accounts.

On a net basis, Barnes Noble reported quarterly income of $2.2 million versus a loss of $6.6 million a year ago.

Factoring in preferred stock dividends and accretion of dividends on preferred stock, it posted a net loss of 4 cents a share, compared with a loss of 17 cents a year earlier. On that basis, analysts expected a loss of 6 cents, according to Thomson Reuters I/B/E/S.

(Reporting by Martinne Geller and Phil Wahba in New York; Editing by Maureen Bavdek and Leslie Gevirtz)

Article source: http://www.nytimes.com/reuters/2012/11/29/business/29reuters-barnesandnoble-results.html?partner=rss&emc=rss

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U.S. Retailers Outperform Forecasts

December 1, 2011 by Leave a Comment

Early reports by big American retailers on Thursday showed November sales were better than expected, buoyed by a strong turnout on Black Friday, the busiest shopping day of the year.

Shoppers appeared to shrug off economic worries, giving a big lift-off to the holiday shopping season. Five of the six retailers tracked by Thomson Reuters that have reported November sales so far have beaten expectations.

Total retail sales for the Thanksgiving weekend reached an estimated $52.4 billion, up from $45 billion last year, according to the National Retail Federation.

Still, many people turned out only for special offers, such as 50 percent off storewide merchandise, so retailers’ profit margins could be under pressure if they continue to resort to deep discounts to entice buying. Many industry watchers said they expected that shoppers under financial stress would hold back after their weekend binge.

Sales at stores open at least a year, or same-store sales, were expected to rise an average of 3.1 percent at 22 chains tracked by Thomson Reuters compared with the same period a year ago. In November 2010, such sales jumped 5.5 percent over the previous year.

Costco said its same-store sales rose 9 percent, topping the 6.5 percent rise analysts expected, due in part to higher gasoline prices.

Limited Brands also surpassed analysts’ predictions. The company, which owns the Victoria’s Secret and Bath Body Works chains, posted a 7 percent increase in same-store sales, compared with the average forecast of just 4.4 percent. Limited also announced that its board declared a special dividend of $2 per share to be paid this month.

Buckle, which sells jeans and other apparel to teens, said its same-store sales rose 6.9 percent, while analysts were looking for a gain of just 4 percent.

Same-store sales at Wet Seal fell 3.1 percent, better than the 6.8 percent decline analysts had expected. The company, whose stores cater to young women, said merchandise margins at its namesake chain over the holiday weekend were “significantly improved,” while its Arden B chain is managing inventories to improve business.

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For a Weekend, at Least, Retailers See Record Numbers

November 28, 2011 by Leave a Comment

The National Retail Federation said Sunday that spending per shopper surged 9.1 percent over last year — the biggest increase since 2006 — to an average of almost $400 a customer. In all, 6.6 percent more shoppers visited stores on the Thanksgiving weekend than last year.

“American consumers have been taking a deep breath and making a decision that it’s O.K. to go shopping again,” despite the high unemployment rate and other signs of caution, said Ellen Davis, vice president at the National Retail Federation.

Numbers from ShopperTrak, a consumer research service, showed equally strong results, with in-store sales on Friday rising by 6.6 percent over last year’s Thanksgiving Friday to $11.4 billion.

Yet there were signs the gains might not last. Analysts said that traffic to stores seemed to slow through the weekend, suggesting that the big start to the holiday season might peter out over time. And shoppers were using credit cards in large numbers, mall owners and analysts said, signaling that consumers were willing to sacrifice savings more than last year, when they paid with cash more frequently.

“With consumers, it’s emotional, so they might feel they need Christmas this year,” said Margaret Taylor, vice president and senior credit officer in the corporate finance group at Moody’s Investors Service. “They could be willing to take on more credit.”

Mark Vitner, a senior economist at Wells Fargo Securities, said in a note to clients that he expected that “consumers will dig into savings” or “temporarily tack on a little more debt” during the holidays.

Retailers hardly objected. Total spending, including online sales, reached an estimated $52.4 billion Thursday through Sunday, the National Retail Federation said. About 35 percent of that total was spent online, slightly higher than last year, the federation said, suggesting that online retailers’ attempts to attract in-store shoppers worked well.

Bill Martin, founder of ShopperTrak, noted that the day after Thanksgiving, usually the year’s biggest sales day, is “one day in a 60-day holiday season.” Still, he said, “what we do know is without a strong start to the season it’s pretty hard to have a good season.”

Given the tight budgets of customers, major retailers aggressively wooed shoppers, moving back opening hours to midnight on Thanksgiving or earlier. It seems to have worked, attracting more shoppers and giving them more hours on Friday to spend.

Almost a quarter of people who went shopping the Friday after Thanksgiving were in stores by midnight Thursday, the federation found. Among 18- to 34-year-olds who went shopping, that percentage was higher — 36.7 percent — than it was among 35- to 54-year-olds, of whom 23.5 percent were in stores by midnight.

“Early Black Friday openings and Thanksgiving-night openings are simply to get a larger share of the customer’s wallet,” Ms. Davis said, adding that research showed that customers tend to spend more at their first stop than at subsequent ones.

Though the longer Friday hours helped bump up sales, some analysts said they might have taken away from steady shopping through the weekend.

“Our perspective is that Black Friday peaked early this year and then lost some of its luster,” said Alison Jatlow Levy, a retail strategist at the consulting firm Kurt Salmon. On Saturday, “the malls felt like an average busy Saturday, but not like a Black Friday extravaganza.”

At the midnight opening of Macy’s Herald Square on Thanksgiving, about 9,000 customers were in line, up from 7,000 last year. Most looked quite young, many saying they had come for the late-night spectacle rather than for specific deals.

Kester Richards, 18, was at the front of the line and said he had waited four hours. He said he was a regular Macy’s shopper and was looking for Ralph Lauren clothes, but had never been to Black Friday before.

Kyun Il Bae, 21, and In Jung Choi, 21, South Korean students studying in New York State, said they had heard about the event and wanted to see what it was like. “I just like the atmosphere,” Mr. Bae said. “It’s a popular place, and I heard this is crazy.” Later, in the store, Mr. Bae did not seem as enthusiastic. He shrugged when asked if he had found any good deals, and looked more exhausted than invigorated.

Rebecca Fairley Raney and Steven Yaccino contributed reporting.

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