Barnes & Noble, Inc. (NYSE:BKS) entered the holiday season with high expectations for its Nook devices and online sales, but it turned out the season wasn’t as festive as they desired.
In a press release by the company on Thursday reporting figures for the nine-week holiday period ending on Dec. 29, same-store sales dropped 8.2% from the previous year, with Nook sales coming in lower than expectations.
Also feeling some pain were Barnes & Noble’s brick-and-mortar sales, which fell 11% to $1.2 billion during this time period, with core same-store sales of the Nook dropping 3.1% from less traffic.
For the Nook, its revenue was $311 million during the holiday period–a 13% fall from the previous year. One bright spot was digital content sales which jumped 13%, but device unit sales fell.
Barnes & Noble, Inc. (NYSE:BKS) isn’t the only company to feel the pain for this key period. On Thursday, retailers reported weak December same-store sales. This has partially been attributed to a decline in consumer confidence from fiscal cliff uncertainty. In 2011, Barnes & Noble’s holiday same-store sales rose 9.7%, representing its greatest performance for that time in more than 10 years which set expectations for 2012.
During the nine-week period, Nook unit sales did double over the Black Friday weekend (four days of shopping). This came from the promotions of external retailers who sell the reader, reported the Wall Street Journal. But just last week, Barnes & Noble gave a heads-up that sales during the holiday would come in lower than expected, with the Nook’s business not meeting corporate projections for April’s year-end fiscal year.
The company has said its goals is to continue giving the top digital reading, shopping and content experience in the marketplace, but it will be persistent about “calibrating expenses to business trends” as a means of moving the business to profitability over time, reported CNET.
Its Chief Executive, William Lynch, said in Thursday’s release, “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”
On February 19, Barnes & Noble, Inc. (NYSE:BKS) will report its second quarter fiscal results.
There have been concerns from industry analysts on whether Barnes & Noble can compete with its rivals, such as Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL), for new product launches. The company has said the market is big enough for numerous players with an eye specifically on readers and families.
Nook’s challenges haven’t stopped external parties from having an interest in it.
Last Friday, Barnes & Noble ensured an $89.5 million investment from Pearson PLC (NYSE:PSO), according to a report from the Wall Street Journal. The Nook venture has a $1.79 billion value, after a $300 million investment in 2012 by Microsoft Corporation (NASDAQ:MSFT). Barnes & Noble has a 78.2% share.
While the company has tried to keep up with the evolving marketplace with a tablet version of the Nook, it will again need to adapt as e-book reader sales have been estimated to dramatically fall worldwide by 27% in 2013, according to research firm IHS iSuppli.
Barnes & Noble, Inc. (NYSE:BKS) is currently up 2.07%, trading at $14.81.