Barnes & Noble Tumbles as Worsening Nook Business Hurts Results

  • Digital content sales plunge 28 percent to $37 million
  • Retailer spun off college bookstore division last month

Barnes & Noble Inc. fell the most in almost 14 years after posting a $34.9 million first-quarter loss, hurt by sharply declining sales in its Nook e-reader business.

The net loss widened to 68 cents a share from a loss of $28.4 million, or 56 cents, a year earlier, the New York-based company said in a statement Wednesday.

Chief Executive Officer Ron Boire, who took the post on Tuesday, has the task of leading a company that consists of more than 600 bookstores and the Nook e-reader division after the August spinoff of its college-bookstore unit. Exiting that business amplified Barnes & Noble’s competition with Amazon.com Inc.

Barnes & Noble plunged 28 percent to $11.80 at the close in New York Wednesday, the biggest drop since November 2001. The shares had gained 7.2 percent this year through Tuesday.

The Nook division posted a $17 million loss before interest, taxes, depreciation and amortization as sales plunged 22 percent. Sales of digital content tumbled 28 percent to $37 million. Executives on Barnes & Noble’s earnings call said the company is considering agreements with third parties to expand the unit’s content. Chief Operating Officer Jaime Carey declined to comment on timing or prospective partners.

While the retail segment fared somewhat better, posting $45 million in Ebitda in the quarter, that was still down 32 percent from a year earlier. Bestsellers such as Harper Lee’s “Go Set a Watchman” and the addition of non-book items helped same-store sales gain 1.1 percent in the quarter. The unit’s total revenue slid 1.7 percent to $939 million.

Separately, the spun-off Barnes & Noble Education Inc. reported a net loss of $26.9 million, or 65 cents a share, for the quarter ended Aug. 1. Sales rose 5.9 percent to $239 million, driven by a jump in non-textbook merchandise and new college contracts.

Its shares fell 2.3 percent to $12.95 Wednesday. They’ve declined 12 percent since trading began in July.

With more than half of colleges running their own bookstores, the company can boost growth by adding contracts from schools seeking to outsource their stores, CEO Max Roberts said in an interview. Executives have also said they’ll look at acquisitions of digital companies.

“We have a sense of urgency about that,” Roberts said, declining to comment on any discussions or timing.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE