Barnes & Noble Inc. (BKS), the largest U.S. bookstore chain, said holiday sales declined as revenue from its Nook division continued to shrink.
Nook sales, which include tablets, content and accessories, sank 61 percent to $125 million in the nine-week holiday period, Barnes & Noble said today in a statement. Sales from stores and the website fell 6.6 percent to $1.1 billion.
Barnes & Noble cut Nook prices during the holiday amid continued competition from Apple Inc.’s iPad. The company had invested heavily in the Nook in an effort to move away from physical books. Yet faltering sales led to the July departure of William Lynch as chief executive officer. Yesterday, the company named chief financial officer Michael Huseby CEO.
“We ended up coming out of the 2012 holiday selling season with a lot of inventory in the device business,” Huseby, 59, said today in a telephone interview. “We accomplished what we wanted to in the holiday, which was selling through the existing inventory.” The average selling price for the devices was “much lower” during the period, he said.
Barnes & Noble rose 7.1 percent to $15.67 at the close in New York. The stock dropped 0.9 percent last year.
Barnes & Noble introduced two new Nook models last holiday season, compared with none during the most recent season.
The Nook “is still a very important part of the company’s strategy, it’s just that it needs to be rationalized so that the cash investment is balanced with the level of revenue we’re earning from it,” Huseby said.
Barnes & Noble’s holiday results are “respectable,” David Strasser, an analyst at Janney Montgomery Scott LLC in New York, said today in a note.
“Digital book sales are plateauing, which is a positive longer term for the brick and click retail segment,” he said. Strasser rates the shares neutral, the equivalent of a hold.
The bookseller, based in New York, operates more than 670 stores. Last year, founder Leonard Riggio, 72, announced his intention to buy the company’s stores and website. Riggio, who is also the company’s chairman and largest shareholder, abandoned the plan in August.
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