Filed under: Company News, Technology, Earnings, Barnes & Noble, Investing
Things certainly haven't been easy for Barnes & Noble. It has posted four consecutive years of losses, and its push to cash in on the digital revolution has sputtered in the wake of Nook's waning popularity. Sales also appear to have peaked two years ago.
It's not pretty, but it's not fatal. There may still be time to write a happy ending for Barnes & Noble, but it needs to get moving.
It's a Holiday Miracle
Barnes & Noble set itself up to be a Black Friday winner by stocking its stores with 500,000 author-signed editions of more than 100 books. Armed with books signed by noted writers and celebrity authors including Neil Gaiman, George W. Bush and Hillary Rodham Clinton, the chain found a way to woo shoppers away from the more traditional Black Friday haunts that include department stores and apparel retailers.
Barnes & Noble also jumped on the discounted tablet bandwagon that dominated the weekend's doorbuster deals, offering the 7-inch Samsung Galaxy Tab 4 Nook for just $129.99, well below its original retail price of $199.99. Since the bookseller also offers $200 worth of book, magazine and video content, a price below $130 is pretty compelling.
Naysayers may call these desperate moves, but there's nothing like offering celebrity-autographed books to remind readers that there are certain things that digital books don't offer.
Thursday Don't Be Late
Barnes & Noble's fiscal second quarter will be interesting. The report is slated for Dec. 4. Analysts see profitability more than doubling to 31 cents a share on a 2 percent dip in sales. The bottom-line burst may seem aggressive, but keep in mind that Barnes & Noble has landed ahead of Wall Street profit estimates in three of the past four quarters. A strong showing would provide favorable momentum heading into the telltale holiday quarter, paving the way for Barnes & Noble's first fiscal year of profitability since 2010.
Barnes & Noble is realistic. It knows that its Nook is no match for Amazon's (AMZN) Kindle, so it has taken steps to distance itself from the platform. Samsung's (SSNLF) putting out Nook-specific tablets is a taste of things to come.
The superstore chain is also expanding its offerings. It's no longer just about books. Anyone who has hit up a store lately has likely noticed an expanded toys and games section. Its playthings experienced a 12 percent spike in comparable-store sales during last year's holiday quarter, and it should be another source of store-level growth this time around. Barnes & Noble is also stocking more traditional gifts including popcorn makers, vinyl turntables, and beer-brewing kits.
This won't be the end. Barnes & Noble was supposed to update its website earlier this summer, but delays find the bn.com makeover being pushed out to next month after the holiday rush subsides.
At a time when many of the year's most successful movies are leaning on books as source material it's only fitting for Barnes & Noble to be transforming itself into a multimedia retailer. It can't stand still, knowing what that did for Borders and smaller rivals that have gone quietly into the good night. It won't stand still.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Barnes & Noble. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.