With losses mounting in its Nook segment, Barnes & Noble reported a net loss of $154.8 million in the fiscal year ended April 27, 2013 compared to a loss of $65.6 million in fiscal 2012. Total sale fell 4.1%, to $6.84 billion. As sales of Nook devices sag, B&N announced that it will be adopting a “partner-centric” model to manufacture its color tablets as part of an effort to significantly cut expenses in the Nook group.
In fiscal 2013, Nook segment sales fell 16.8% (including a 34% decline in the fourth quarter) to $776.2 million. The segment racked up EBITDA losses of $475.4 million compared to $261.7 million last year; $222 million of the fiscal 2013 losses were due to inventory charges. B&N said it will continue to sell existing devices through the 2013 holiday season and will continue to develop its Simple Touch and Glowlight e-readers, the two lines that generate the most content sales, in-house. On the digital content side, sales rose 16.2% for the full year, but were down 8.9% in the fourth quarter due to difficult comparisons with last year’s Fifty Shades and Hunger Games successes. CEO William Lynch repeatedly stressed that the emphasis in the year will be on cutting Nook losses and pointed to the $26 million in expenses it cut in the unit in the fiscal fourth quarter which he said came from reductions in marketing costs, lower headcount, and other savings initiatives. Lynch acknowledged that the losses in the Nook group were "much higher than expected."
B&N will continue to add content to its digital stores, including apps and e-books, executives said. And a spokesperson said the company still expects to have 10 international Nook stores by the end of 2013.
In retail trade, sales for the full year fell 5.9%, to $4.57 billion although EBITDA rose to $374.2 million from $322.5 million. B&N attributed the decline to a 3.4% drop in comparable store sales (8.8% for the quarter), lower online sales, and store closures. Executives said "core comps"-presumably of books and educational games and toys--"were essentially flat" in the year. B&N closed 18 outlets in fiscal 2013 and opened two leaving it with 675 trade stores at the moment. In fiscal 2014 it will open up to five stores and close 15 to 20.
B&N did not have a positive outlet for fiscal 2014 for the retail stores, forecasting comp declines in the high single digits. College group comps are expected to fall in the low single digits. B&N will spend $75 million on the retail stores in the current year, money that will be spent on new stores and maintenance of existing outlets.
Asked several times by analysts of the status of the discussions with Len Riggio to buy the retail stores, executives had no comment and declined to give a timeframe for when a decision will be made.
