Digital content sales decrease 21.2% year over year, the chain says.
While total revenue for Barnes & Noble Inc. decreased by 8% year over year in the second quarter of fiscal 2014, to $1.73 billion from $1.88 billion in the second quarter of 2013, the retailer’s digital-content business fared even worse, the retail chain reported today. Sales of digital content, such as e-books and e-magazines, sold through the retailer’s Nook devices and apps, decreased 21.2% year over year in the quarter ended Oct. 26, to $57.3 million from $72.7 million in Q2 2013.
Total sales in the Nook division, which also include sales of the tablets and accessories, were down 32.2% year over year in the quarter, to $108.7 million from $160.3 million, Barnes & Noble says.
To pick up those sales in the future, the retailer is looking beyond its own hardware. “In addition to selling content on our own devices, we are interested in growing other channels of distribution,” Michael Huseby, president of Barnes & Noble Inc. and CEO of Nook Media LLC, told investors in an earnings conference call this morning. That includes deals with other companies such as Microsoft Corp., which in October 2012 invested $300 million in the Nook Media business, spurring its spinoff as a Barnes & Noble subsidiary.
“Yesterday, we announced that Nook for Windows 8.1 is now available in 32 countries and 21 languages,” Huseby said in the call. Expanding Nook accessibility internationally is one of the company’s main plans for growing content sales, he added. Any consumer with a Microsoft account can now shop or consume Nook content automatically, without setting up another account, he says.
This morning, the retailer also announced an agreement with electronics manufacturer Samsung, which will be preloading the Nook reading app onto its new Galaxy Tab 3 Kids devices. Nook will be the only preinstalled reading app on them, Barnes & Noble says.
Online sales through BarnesandNoble.com were also down again in Q2, the retailer says, though it doesn’t break out those sales separately. Together with stores, the company’s retail segment had revenue of $921.0 million, down 7.5% from $996.0 million in Q2 2013, it says. Comparable-store sales were down 4.9%, or 3.7% excluding sales of Nook products, Barnes & Noble says. That sales decrease, combined with store closures and lower online sales, led to the overall decline in the company’s retail segment, it says.
The retailer’s college bookstores division came out the least depressed this quarter, with a 4.6% decline in year-over-year sales, to $737.5 million from $773.0 million in Q2 2013, it says. Barnes & Noble is working to grow its college sales, including by releasing its first digital textbooks for sale by the end of the year, Huseby said in the conference call. The company also opened six new college bookstores in the second quarter, and 21 year to date, he said.
Despite the company’s revenue losses, for the second quarter it reports a net income of $13.2 million, up 2535% from $501,000 in Q2 2013. “During the second quarter, Barnes & Noble grew earnings through improved margins and reduced expenses, while also completing another successful college rush season,” Huseby said without being more specific.
For the first half of fiscal 2014, ended Oct. 26, 2013, Barnes & Noble reports:
BarnesandNoble.com in No. 27 in the 2013 Internet Retailer Top 500 Guide.