Photo Credit: Mike Mozart
Barnes and Noble, the largest retail bookseller in the US, will be reporting 2Q2016 earnings today after the market closes. Expectations are bleak, as analysts are confident the company will suffer a year over year decline in EPS and revenue. Since the e-book phenomena, Barnes and Noble has been struggling to keep up with the popular shift to digital reading. Though the Nook, an e-reader device, was introduced in 2010, the company has never been able to catch the Amazon Kindle and has ached with serious losses. The Estimize consensus is predicting a loss of $0.28 per share and revenue of 915.9 while Wall Street Analysts are projecting a loss of $0.31 per share and revenue of $917.3 million.
Recently, Barnes and Noble was split into two publicly traded entities: Barnes and Noble Inc. and Barnes and Noble Education. The new company focuses on college students and professors and is an expansion of the already successful college bookstore business that the retailer employed. This split may turn into a positive as Barnes and Noble Inc. can now focus on competing in the broad retail world.
The Journey to Broad Retail
As of now, emphasis has been placed on several areas of the Barnes and Noble products: the Nook, the toy department, and the bread and butter physical book selling. It is common knowledge that the Kindle is the e-reader of choice for many. Since its launch in 2007, sales figures have outperformed virtually every competitor, including the Nook. Nook sales continue to dissolve and at this point, the product is pretty much a lost cause. Barnes and Noble would love to divest, but the only real chance at a divestiture would be if a buyer comes along. So far, there haven’t been any takers.
However, one positive for B&N is music album sales. In late November, popular artist Adele, released her album “25.” Barnes and Noble experienced its largest ever first day album sales as Billboard claimed the artist would sell 2.5 million albums in its first week, surpassing the record. Adele’s 25 has now sold over 4.2 million copies in the US, 3.38 million of which were sold in its first week. As Adele’s album is stocked in shelves in B&N stores, a boost in sales figures is likely.
B&N has been gaining market share in toy selling. As opposed to major toy retailers like ToysRus and Wal-Mart, Barnes and Noble toys have more of an educational purpose. Furthermore, initiatives for online sales have been implemented to help bolster all sales. Prices are very competitive with Amazon and free shipping is included on orders of $25 or more. As the physical book industry is starting to flatten out and is expected to rise, B&N is positioning itself in the correct manner for a potential comeback.
As a part of broad retail, the brick and mortar book retailer also sells DVDs and Blu-Rays, turntables and LP’s through its vinyl store, home & gift items, and hobby & collectibles products, free shipping on orders of $25 or more.
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