August 22, 2012, 4:19 PM

Nook sales grow, but only barely, for Barnes & Noble in Q1

Combined Nook hardware and digital content sales increased 0.3%.

Mark Brohan

Research Director

Lead Photo

It was a modest first quarter all around for bookseller Barnes & Noble Inc., including for Nook, its electronic book reader and digital content subsidiary.

For the first quarter of fiscal 2013 ended July 28, Barnes & Noble, No 32 in the 2012 Internet Retailer Top 500, reported:

  • Sales for Nook, which include hardware sales and digital content, increased 0.3% to $192.0 million from $191.4 million in the first quarter of fiscal 2012. Barnes & Noble says sales of Nook digital content grew year over year 46% but didn’t report specific numbers.
  • Total sales grew year over year 2.8% to $1.45 billion from $1.41 billion.
  • Retail sales, which now include the retailer’s remaining e-commerce business from BN.com, increased 2.8% to $1.12 billion from $1.09 billion.
  • Comparable sales, including e-commerce, increased 4.6% on sales of new titles such as 50 Shades of Grey. Net loss was about $41.0 million compared with a net loss of $56.6 million in the first quarter of fiscal 2012.

Barnes & Noble will continue to spend heavily—and incur losses—as it builds its Nook business, now part of a $300 million venture with Microsoft. Nook-related sales and administrative expenses totaled $82.8 million in Q1 of fiscal 2013 compared with about $77 million in the prior year, an increase of about 7.5%.

“Expenses in the Nook segment grew as planned as we incurred significant upfront costs internationalizing our Nook digital content retailing platform and e-commerce systems in advance of the launch of our Microsoft partnership,” CEO William Lynch told analysts on the company’s earnings call. “We invested in preparing for the fall launch of our Nook devices and best-in-class digital book store in the United Kingdom.”

In the first quarter sales of Barnes & Noble’s ‘e-ink’ readers, the Nook Simple Touch and its GlowLight version, which are designed to mimic on a tablet the experience of reading ink printed on paper, were slow because of some supply chain development issues. The company doesn’t break out unit sales. “In Q1 we were never able to fully capture the opportunity from GlowLight's demand and buzz,” Lynch told analysts. “Suboptimal production yields relating to the complexities in our newly invented breakthrough lighting technology resulted in consistent out of stock positions throughout all of our retail channels this entire quarter.”

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