September 16, 2014

Barnes & Noble Will End Manufacturing Nook Tablets as Company Posts Large Quarterly Loss

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From CNET:

Barnes & Noble is taking its losses and running.

In a statement released Tuesday, the retailer revealed that it’s pulling out of its Nook tablet manufacturing business in the face of ongoing losses:

The company plans to significantly reduce losses in the Nook segment by limiting risks associated with manufacturing. Going forward, the company intends to continue to design eReading devices and reading platforms, while creating a partnership model for manufacturing in the competitive color tablet market. Thus, the widely popular lines of Simple Touch and Glowlight products will continue to be developed in house, and the company’s tablet line will be co-branded with yet to be announced third party manufacturers of consumer electronics products.

From paidContent:

Investors were expecting a bad earnings report from Barnes & Noble on Tuesday and they got it. The company’s revenues were down 7.4 percent compared to this time last year, to $1.3 billion, in the fourth quarter of fiscal year 2013, with a net loss of $118.6 million, or $2.11 per share. For the full fiscal year, revenues were down 4.1 percent to $6.8 billion, with net losses of $154.8 million, or $2.97 per share, compared to $65.6 million the previous year.

From Bloomberg:

Barnes & Noble Inc. (BKS), the U.S. bookstore chain that’s considering breaking itself up, posted a loss that was twice as wide as analysts estimated and said it would stop making tablets as the digital unit’s sales plummet.

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Barnes & Noble has been trying to navigate readers’ shift away from paper books with its Nook brand of tablets and e-readers. After some success, growth stalled during the holidays, and the drop continued last quarter with revenue from the unit sinking 34 percent to $108 million. The division’s loss before interest, taxes, depreciation and amortization widened to $177 million from $77 million a year ago.
As part of its plan to improve results of its Nook unit, the company said it will stop manufacturing tablets and will instead use an unidentified partner that will be co-branded on the devices. The company will continue making e-readers on its own.

See Also: Full Text of Earnings News Release

The Retail segment, which consists of the Barnes & Noble bookstores and BN.com businesses, had revenues of $948 million for the quarter and $4.6 billion for the full year, decreasing 10.0% for the quarter and 5.9% for the fiscal year. The sales decreases were attributable to comparable store sales decreases of 8.8% for the quarter and 3.4% for the full year, store closures and lower online sales.

The College segment had revenues of $252 million for the quarter and $1.8 billion for the full year, increasing 10.7% for the quarter and 1.1% for the year, as compared to the prior year periods.

“Our Retail and College businesses delivered strong financial performances in fiscal year 2013,” said William Lynch, Chief Executive Officer of Barnes & Noble. “We are taking big steps to reduce the losses in the NOOK segment, as we move to a partner-centric model in tablets and reduce overhead costs. We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device.”

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Gary Price About Gary Price

Gary Price (gprice@mediasourceinc.com) is a librarian, writer, consultant, and frequent conference speaker based in the Washington D.C. metro area. Before launching INFOdocket, Price and Shirl Kennedy were the founders and senior editors at ResourceShelf and DocuTicker for 10 years. From 2006-2009 he was Director of Online Information Services at Ask.com, and is currently a contributing editor at Search Engine Land.