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Barnes & Noble 4Q loss narrows

This Monday, June 18, 2012, photo shows the Barnes and Noble Booksellers store in Hoover, Ala. Barnes & Noble said Tuesday, June 19, 2012, that its fiscal fourth-quarter loss narrowed as the company continues to invest in its Nook e-reader business. The loss was wider than analysts expected and its shares fell more than 6 percent in morning trading. This Monday, June 18, 2012, photo shows the Barnes and Noble Booksellers store in Hoover, Ala. Barnes & Noble said Tuesday, June 19, 2012, that its fiscal fourth-quarter loss narrowed as the company continues to invest in its Nook e-reader business. The loss was wider than analysts expected and its shares fell more than 6 percent in morning trading. (AP Photo/Dave Martin)
By Mae Anderson
AP Retail Writer / June 19, 2012
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NEW YORK—Barnes & Noble said Tuesday that its fiscal fourth-quarter loss narrowed as the company continues to invest in its Nook e-reader business and adjust to the evolving book business.

Facing tough competition from online retailers and discount stores, the largest traditional U.S. book retailer has invested heavily in the Nook e-reader and e-books.

Barnes & Noble broke out sales of its Nook e-reader for the first time, the most transparent it has been about the division to date. They show that the division is a work in progress.

Nook sales fell 11 percent to $164 million during the quarter as the company took back its Nook Simple Touch e-reader from retailers to make room for new inventory. But for the fiscal year, Nook sales rose 34 percent to $933 million.

"We grew our business in 2012 while continuing to make the necessary investments for the future of the business," said CEO William Lynch.

In a call with investors, Lynch said he estimates Nook is maintaining a 25 percent to 30 percent share in the total digital content business. Its chief rivals are Amazon.com's Kindle and Apple Inc.'s iPad.

The company also said it plans international expansion for the Nook, currently only available in the U.S. It plans to be in several undisclosed international markets by the holidays.

Barnes & Noble said its net loss totaled $57.6 million or $1.08 per share, for the three months ended April 28. That's smaller than its loss of $59.4 million, or $1.04 per share, a year ago. A tax charge hurt results by 10 cents per share. It had 1 percent more shares outstanding in the latest quarter than a year ago.

Analysts expected a smaller loss of 92 cents per share, according to FactSet.

Revenue was nearly flat at $1.38 billion. Analysts expected higher revenue of $1.48 billion.

Its shares fell 61 cents, or 4 percent, to close at $14.63 Tuesday. They are down about 44 percent from their 52-week high of $26 in late April. They traded as low as $9.35 in January.

Retail revenue, which includes online revenue, rose 0.5 percent to $1.05 billion. Revenue from college bookstores rose 6 percent to $228 million.

Retail sales benefited from higher Nook sales, and demand for trilogies including "The Hunger Games" and "Fifty Shades of Grey." They also benefitted from Borders closing last year.

"Barnes & Noble is now the only place across this country for consumers to shop a large assortment of physical books, magazines and other media," Lynch said. "We saw the benefit of this unmatched selection and increased sale and traffic into the stores in the full year fiscal 2012 and the fourth quarter."

Excluding Nook sales, revenue in stores open at least one year rose 7 percent for the quarter.

Nook device sales fell during the quarter due to higher third-party channel partner returns, lower selling volume and lower average prices, the company said.

Barnes & Noble said that it took back Nook Simple Touch inventory in order to make room in the supply chain for new products like its Nook Tablet. The $99 Simple Touch is Barnes & Noble's most basic e-reader. Barnes & Noble introduced the flashier $199 Nook Tablet, with a touch screen and tablet features, in November 2011.

The New York company struck a deal in April with Microsoft Corp. to help support its Nook business. Microsoft will invest $300 million to help create a subsidiary for Barnes & Noble's e-book and college textbook businesses, giving it a long-desired foothold that space. Microsoft receives a 17.6 percent stake in the venture.

For the fiscal year, its net loss narrowed to $68.9 million, or $1.41 per share, from $73.9 million, or $1.31 per share, a year earlier. Revenue rose nearly 2 percent to $7.13 billion from $7 billion a year ago.

Morningstar analyst Peter Wahlstrom said he was hoping for more guidance from the company about the current fiscal year.

"They really didn't provide any visibility into fiscal 2013," he said. "If we don't have visibility that suggests they don't have visibility, and that makes investors uncomfortable."

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