Barnes & Noble Does Fine on Profits, But Not Sales in Fiscal 2017

As of this month, Sunbury Press has discontinued publishing on the Nook platform. Sales had plummeted to just a couple units per month — hardly worth the trouble. We also suspect a lot of the returns in recent months have been from Barnes & Noble, through our distributor, Ingram. Such a wave of returns preceded the collapse of Borders in 2011.
Below is an article from Jane Friedman’s Hot Sheet …
 
Barnes & Noble’s fiscal year ended in April, so we have a new set of earnings reports and commentary to share on the chain bookstore’s beleaguered performance in 2017. As our astute readers are aware, B&N’s outlook hasn’t been a rosy one, and their revolving door for CEOs hasn’t helped. (The latest CEO, Demos Parneros, took his position at the helm after a 30-year run at Staples.)
The good news is that B&N met their profit goals; the bad news is that full-year sales were down 6.5 percent from the prior year. Since B&N sales encompass many media, not just books, it’s helpful to look at earnings in the book category alone. Unfortunately, the decline is about the same-6 percent-partly due to lower sales of coloring books and juvenile titles. And they expect the sales decline to continue in 2018.

In Publishers Lunch (paywall), Michael Cader summarizes how B&N management, in an investor’s call, said they would address the challenges: launch a series of tests. Cader writes, “A lot of those tests focus on store layouts, ‘starting with space productivity,’ adjusting categories that are in decline and those that are growing.” That means: look for reduced space in areas of underperformance, including the Nook and music DVDs.

Bottom line: Always remember that B&N’s performance is not necessarily indicative of overall book retail health. Print book sales as tracked by BookScan in 2017 show that the industry is not suffering the same rate of decline as B&N. Therefore, B&N is losing share to its competitors. With declining revenue, we anticipate B&N may fall victim to the cut-your-way-to-profitability business strategy. Parneros has said a “company-wide simplification process will take out costs.” B&N stock closed last week at $7.50 a share. In July of last year, the stock was trading at around $12.