Barnes & Noble Struggles to Hang On With New CEO, New Strategies
Barnes & Noble stock fell sharply in the week ending Sept. 11 after the bookseller reported an unexpected first quarter loss of $34.9 million.
The Nook ebook business continued to drag down the company’s overall performance. Despite some positive news on same-store sales, efforts to turnaround the Nook segment seem fruitless. Can the former giant retail bookstore shore up confidence with new strategies and a new CEO?
“It is only my second day with the company. I am very excited to be part of Barnes & Noble,” said Ron Boire, the new CEO on a conference call with investors on Sept. 9.
Barnes & Noble Inc. (NYSE: BKS) shares fell 28 percent to $11.8 on Sept. 9 after the company reported $1.2 billion in revenues (down 1.5 percent) and a 19 percent increase in net losses compared to last year.
Revenues from Nook, including digital content, devices, and accessories tumbled 22 percent due to weak digital content sales, leading to a $17 million operating losses.
But Boire thinks it is a great time to join the company and aims to grow the business by “integrating stores, website, and Nook business, to create a strong omni-channel presence.”
Last year, as part of the turnaround efforts, the company laid off engineers and outsourced its tablet production to Samsung. On Sept. 3, the company launched its new e-book tablet co-branded Galaxy Tab S2 NOOK. It’s supposed to be the thinnest, lightest tablet out there and ultra-fast coming in at $399.99.
Nook has been steadily losing market share to Amazon’s Fire, Apple’s iBook and other smart phones. In 2014, Barnes & Noble announced its intention to separate its Nook business after Microsoft ended its Nook media partnership with a $238 million loss on its investment.
The company is now shifting its focus on reducing Nook expenses through the new www.BN.com website and synergies with the retail business.
In addition, the COO of Barnes & Noble Jaime Carey said they are still focusing on ways to increase app downloads and third party arrangements to provide a wider distribution platform for Nook’s content.
Retail, which includes 647 Barnes & Noble bookstores and www.BN.com, had revenues of $939 million in the first quarter making up 76 percent of the total business. Retail sales declined by 1.7 percent compared to last year due to store closures and lower online sales. The company will continue to close stores to reduce costs despite book lovers’ effort to keep them open.
Recently, residents in Queens, New York, were disappointed with the retail chain’s decision to close two of its bookstores in the area. Residents started a petition and founded a new Facebook page “Keep Barnes & Noble Open in Queens” which as of Sept. 12 had a little over 3,900 followers.
There is some good news, however: In the retail segment, comparable store sales (an important statistic used in the retail industry) increased 1.1 percent for the quarter, due to robust sales in nonbook categories like games and toys. The company also benefited from strong book titles like Harper Lee’s “Go Set a Watchman” and E. L. James’s “Grey.”