Nook success helps cut Barnes & Noble loss

NEW YORK — Barnes & Noble saw revenue increases across all of its segments, but it was its digital segment, lead by Nook, that helped narrow its net loss for the fourth quarter and fiscal year 2012.

Barnes & Noble's consolidated revenue for the fourth quarter increased 0.4% to $1.4 billion as compared with the prior year. Net loss for the quarter improved 3% as compared with the prior year to $57.7 million, or $1.08 per share.

For fiscal 2012, consolidated revenues increased 2% to $7.1 billion as compared with the prior year.The fiscal 2012 consolidated net loss improved 7% as compared with the prior year to $68.9 million, or $1.41 per share.

Sales at the company's retail segment were $1.1 billion for the quarter and $4.9 billion for the full year, increasing 0.5% for the quarter while decreasing 1.5% for the fiscal year. Comparable bookstore sales increased 4.5% for the quarter and 1.4% for the full year, as compared to the prior year periods. According to the company, the comps increase was helped by the closing of Borders' stores in 2012, increased sales of Nook products, and a strong title lineup including "The Hunger Games" and "Fifty Shades of Grey" trilogies. Core comparable bookstore sales, which exclude sales of Nook products, increased 6.9% for the quarter and 0.7% for the full year. BN.com sales continued to decline for the quarter as well as the fiscal year.

Barnes & Noble College bookstores saw their revenue increase 5.7% for the quarter to $228 million and decrease 1.9% to $1.7 billion for the year. As compared to the year ago period, fourth quarter sales were positively impacted by the recognition of textbook rental sales deferred from the third quarter. However, full year sales were lower as compared to a year ago, due to a shift from selling new and used textbooks to lower priced textbook rentals. Comparable College store sales decreased 2.2% for the quarter and 0.3% for the full year, as compared to the prior year periods. College comparable store sales reflect the retail selling price of a new or used textbook when rented, rather than solely the rental fee received and amortized over the rental period.

The company's Nook segment delivered revenue of $164 million for the quarter and $933 million for the full year. Nook segment comparable sales increased 1% for the fourth quarter while increasing 45% for the full year, as compared with the prior year periods. Device sales declined during the fourth quarter due to higher third-party channel partner returns, lower selling volume and lower average selling prices. In order to optimize the supply chain for new products, the company took back NOOK Simple Touch inventory following the previously announced holiday sales shortfall. Digital content sales increased 65% for the fourth quarter and 119% for the full year on a comparable basis, growing comparable digital content sales to $483 million for the full year. Digital content sales are defined to include digital books, digital newsstand, and the apps business.

“We grew our business in 2012 while continuing to make the necessary investments for the future of the business,” said William Lynch, CEO of Barnes & Noble. “In digital, our Nook content sales continued to explode with 119% year-on year growth. In the quarter we also announced a historic new partnership with Microsoft that will include a significant investment in Newco, and that will capitalize the company to fuel continued growth in digital and international expansion. Lastly, we announced Nook Simple Touch with GlowLight, that we started shipping in the first quarter of fiscal 2013, which has quickly become the highest rated eReader in the market. At retail, we had a terrific year growing comparable bookstore sales 4.5% for the quarter and 1.4% for the year, a result of our effective new merchandising efforts and continued industry consolidation. As we look out to fiscal 2013, we feel the company is strategically well positioned to grow value for shareholders.”