Wednesday, August 22, 2012
Barnes & Noble did something they haven't done for a while in their just-reported fiscal first quarter: They actually exceeded analysts' pessimistic earnings expectations, with a reduced net loss of 78 cents per share (or $41 million), versus the predicted 96 cents a share. And they showed positive EBIDTA for the quarter--just $4 million, but much better than a $24 million loss a year ago. Also, actual bookstore book sales continued to improve, despite a forecast last quarter that those comps would decline in fiscal 2013.
But that's about it for the good news. The bad news is that the supposed "rapidly growing Nook business" has seriously stalled on a topline basis due to declining device dollars, and even the increases in digital content sales are getting smaller--consistent with our analysis recently that ebooks are growing more slowly than they had been. That means the Nook business, where losses were supposed to start coming down, is losing even more money than before. And overall company sales of $1.453 billion were below expectations, up 2.5 percent from $1.418 billion a year.
Nook losses were $6 million (or 12 percent) higher at $57 million for the quarter, blamed on "continued investments in the Nook business" and ever-lower prices on existing devices. They continue to have supply chain issues on the device that people want, as well, citing "production scaling issues" for the Nook Simple Touch with GlowLight producing "unmet demand" yet again. On the earnings call Tuesday ceo William Lynch said Glowlight was "consistently out of stock...for the entire quarter" and was "never able to fully capture buzz and enthusiasm." It's only in the last two weeks that device production has smoothed out without any interruptions, and Lynch believes sales of the device would have been "materially higher" if not for the production issues.
Founding publisher of Thomas Allen Publishers Patrick Crean has joined HarperCollins Canada to oversee his own imprint, Patrick Crean Editions, which will publish between eight and 12 titles per year with a focus on Canadian literary fiction and non-fiction. "In these perilous times in publishing, editorial is under such siege by corporatism to produce, to make a profit," Crean told Quill & Quire. "Of course, HarperCollins is that, but they really and truly seem to be devoted to the editorial function and understand it, and that’s what drew me there." HarperCollins Canada publisher and editor-in-chief Iris Tupholme said the launch titles on Crean's list may appear as early as May 2013: "We're not in any rush to put together a list before it’s ready, but if Patrick has titles ready to publish then we'll go full steam ahead."