I know we’ve been here before, not least in the company of Bloomberg and B&N itself. But Barnes & Noble’s latest disappointing quarterly numbers spell out the case for, this time, really ditching the Nook – in red ink that’s hard to ignore.
B&N’s retail bookstore results from 2Q2015 were unexciting, but hardly terminal. “Retail sales, which include Barnes & Noble stores and BN.com, were $861 million, decreasing 3.1% due to lower online sales, store closures and a 1% comparable store sales decrease,” B&N’s announcement stated. “Excluding NOOK products, comparable store sales decreased 0.5% for the quarter.” Following these results, TheStreet even retains a “Hold” rating on B&N’s stock, citing B&N’s supplementary statement that “through Black Friday weekend, third quarter comparable store sales excluding NOOK products increased 1.1%.”
It’s the Nook division that is really bleeding red. “NOOK sales of $43.5 million decreased 31.9% due primarily to lower content sales,” noted the announcement. “NOOK EBITDA losses of $21.3 million declined $15.1 million versus the prior year as the company continues to reduce expenses.”
And yes, that suggests that B&N’s ebook sales, rather than its devices, are the problem, but the latest Nook entry in the e-reader stakes, the Nook Glowlight Plus, hasn’t exactly … ahem … set the world on Fire. That device in itself elicited a number of gloomy prognostications of B&N’s imminent exit from the e-reader business. It’s hard to argue that the dynamics have changed much since then. Amazon is busily trumpeting how many $50 Fires it’s sold, giving the new e-book reader a no-brainer choice of vendor. With its well-publicized restrictions on access to outside e-book sources, who would want to commit to the Nook ecosystem now?
B&N, meanwhile, may have a less dire future than many Cassandras believe. Seeking Alpha is busily arguing off the back of the latest results that its problems are “self-inflicted,” and that “the U.S. printed book market is flattening out and is likely to begin growing again.” And Waterstones’ performance in the UK, notwithstanding the anti-ebook snark loaded onto it, does show that a printed book retail turnaround is possible, even in today’s market.
So is it really time, this time, to kiss the Nook goodbye? Even a year ago, with the last Nook-spinoff-that-wasn’t, Bloomberg was claiming that: “essentially ditching the Nook—an expensive digital strategy that appears not to have worked, given the competitive landscape—could make the bookseller’s core retail operation more attractive to a buyer.” And whatever everyone thinks of the Nook platform right now, it’s unlikely that a new owner could do worse with it after a spinoff than B&N is doing already. If I was an activist investor in B&N stock, I’d be pressing for all this to happen. Revised expectations after ditching the Nook deadweight, and a potential acquisition premium or bidding war? All meat and drink to an activist.
The problems B&N has had with its website and thus with selling e-books are self-inflicted. It doesn’t get much better when you consider its new e-reader device. B&N’s new Glowlight Plus has some problems from my perspective.
1)Without any light, the background is gray, which doesn’t compare well with the Nook Simple Touch background. I don’t care if the background looks better with the light turned on, as I am going to have the light turned off to maximize battery life.
2) B&N got rid of thick fonts, like the Helvetica offshoot – which is the one I used on the Simple Touch. Yes, Malabar is thick, but I much preferred the simpler look of Helvetica.
3)Third problem: if you press too hard on the side, you get out of the book you are reading and get sent back to the default screen. This is a consequence of getting it as thin and light as possible. With most e-readers, the sides of relatively thick plastic are not so sensitive.
4) Re the problem with Adobe library editions- I figure that will get fixed, if it hasn’t already, so it is a non-issue with me. But it points out that B&N didn’t plan things right. This should have been fixed before the Glowlight Plus was sold to the public.
I wonder how much customer testing B&N did, to see how consumers responded to what the engineers thought would be cool. I suspect not much.
The Nook Simple Touch was and is a good piece of machinery, so it isn’t that B&N has never had a clue.
I have no sympathy whatsoever for B&N.
Bunch of idjits.
FYI: It’s reported that the Glowlight Plus now works with Adobe DRM. However, the process is different than with earlier NOOKs because the device does NOT communicate with Adobe Digital Editions. You authorize the device directly with your Adobe account (under Settings>Account & Profile), then sideload the DRMed ebooks using drag-n-drop.
Details here: http://nook.barnesandnoble.com/u/support-nook-glowlight-plus/379004439
That was available from the beginning. it isn’t new.
Show me a Kindle where I can side-load a memory card, and I’ll be willing to switch.
The $50 Kindle Fire tablet has a SD card
Little Egret in Walton-on-Thames