February 24, 2010, 12:00 AM

Barnes & Noble CEO stakes the company’s future to e-commerce

With an aggressive new business development in the e-book reader market, Barnes & Noble is transforming itself from a conventional books retailer into a major e-commerce franchise, CEO Steve Riggio told Wall Street analysts.

Mark Brohan

Research Director

Lead Photo

Barnes & Noble Inc. sees the future and it’s clearly e-commerce.

In fact with a burgeoning online business and aggressive new business development in the e-book reader market, Barnes & Noble is transforming itself from a conventional books retailer into a major e-commerce franchise, CEO Steve Riggio told Wall Street analysts on the company’s third quarter earnings call.

"2009 was a year in which we set the stage for growth and we expect that 2010 will be a watershed year in Barnes & Noble`s transformation from being a brick-and-mortar retailer to becoming a major e-commerce retailer," Riggio told analysts. "The core e-commerce business has really began to gain momentum and 2010 is going to be the year where we are fully in stock with the nook device, and will ramp up on marketing with good displays."

While it didn’t break out specific numbers for its new e-book reader, Barnes & Noble Inc. nonetheless credits sales of nook with providing a spark in web sales for the third quarter of fiscal 2010.

For the third quarter ended Jan. 30, 2009, Barnes & Noble, No. 41 in the Internet Retailer Top 500 Guide, reported:

  • Web sales increased 32.1% to $210.0 million from $159.0 million in the third quarter of fiscal 2009.
  • Total sales grew year over year to $2.17 billion from $1.63 billion. The 12-week reporting period reflects a change in the bookseller’s fiscal year following the acquisition of Barnes & Noble College Booksellers. The company’s 2010 fiscal year now covers the period from May 3, 2009, to May 1, 2010.
  • The web accounted for 9.7% of total sales compared with 9.8% in the third quarter of fiscal 2009.
  • Net income decreased 0.6% to $80.4 million from $80.9 million.
  • Comparable-store sales declined 5.5%.
“Nook began shipping only in the middle of the third quarter, and as evident in our sales, we are thrilled with how customers have embraced our product and our digital eBook platform,” says Riggio. “In addition to the accelerating online sales trends, nook sales have been strong at our bookstores since the product became available earlier this month.”

Barnes & Noble didn’t break out web sales for the first three quarters of fiscal 2010, but did report:

  • Total sales grew year over year 13.4% to $4.49 billion from $3.96 billion in the first three quarters of fiscal 2009.
  • Net income decreased 12.0% to $68.7 million from $78.1 million in the previous year.
“Online sales accelerated throughout the quarter, increasing 67% year-over-year for the month of January,” says Riggio.

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