Barnes & Noble’s 10-K filing with the Securities & Exchange Commission provides a bit more of a glimpse at its plans for international expansion as well as another look at how its mix of sales is changing. According to the filing, under terms of the agreement with Microsoft that formed NewCo, the new company will make a good faith effort to expand its international business, and in the filing B&N says that through NewCo it plans to launch the Nook digital bookstore in 10 countries within 12 months.
The filing also reiterated comments CEO William Lynch has made about plans to sell the Nook devices overseas. “While there can be no assurances, the Company intends to have one or more distribution agreements in place to sell NOOK® devices in certain countries outside the U.S. prior to the 2012 holiday season,” the filing states.
B&N has acknowledged that it is spending heavily on the Nook, and in the 10-K, the company said that as of April 28, there were 533 Nook employees. The company also has plans to allocate $175 million in capital expenditures in fiscal 2013 “primarily relate to the Company’s digital initiatives, buildout of its Palo Alto [Nook] facilities, new stores, maintenance of existing stores and system enhancements for the retail and college stores.” It spent $163.6 million in capital expenditures in fiscal 2012.
Regarding the future ownership of NewCo, the 10-K noted that B&N is actively exploring the possibility of separating NewCo (which includes the Nook division and college stores), but it is not certain that a separation will occur and added that “there is no timetable for this review.”
Reviewing its fiscal 2012 performance, B&N noted that “comparable physical book sales, including trade, juvenile and bargain, were essentially flat” as B&N benefited from the Borders liquidation. The overall increase in comparable store sales was primarily attributable to the expansion of non-book categories, such as Nook devices and accessories, toys & games and gift products. In the 10-K, B&N reported that media sales (“tangible” books, music, movies, rentals and newsstand) accounted for 66% of total revenue, or $4.71 billion compared to 70% ($4.90 billion) in fiscal 2011. Digital, including devices and econtent, accounted for 15% of sales ($1.11 billion) up from 11% ($770 million) in the prior year. The Other segment, (including toys & games, café products, gifts and miscellaneous), generated 19% of revenue, the same level as in fiscal 2011.