Posted on 01/07/2012 6:22:34 AM PST by Kaslin
Retail sales are up but profits are down as noted in Profit Warnings at Target, Kohl’s, J. C. Penney, American Eagle
However, shrinking profits are one thing, huge losses another.
On Thursday, Barnes & Noble increased its projected loss per share for the current fiscal year to between $1.10 and $1.40, from the 30 cents to 70 cents it reaffirmed one month ago.
I have commented before that brick-and-mortar book stores are in serious trouble. It's time to move Barnes & Noble to the top of the list.
The Wall Street Journal reports Barnes & Noble Seeks Next Chapter
The nation's largest bookstore chain warned Thursday it would lose twice as much money this fiscal year as it previously expected, and said it is weighing splitting off its growing Nook digital-book business from its aging bookstores.
Ironically, Barnes & Noble had been one of the first to recognize the potential of digital books. In 1998, it invested in NuvoMedia Inc., maker of the Rocket eBook reader, and the bookseller actively supported digital-book sales. But in 2003, it exited the still-nascent business, saying there wasn't any profit in it.
It wasn't until 2009 that Barnes & Noble re-entered the business, introducing its Nook e-reader. By then, Amazon had been selling its Kindle device for about two years, and was offering best sellers for $9.99, a fraction of what hardcover best sellers are priced at.
Apple introduced its iPad tablet in January 2010. Amazon responded with its competing Kindle Fire tablet this past September, and in November, Barnes & Noble introduced its Nook Tablet.
To promote the Nook, the retailer returned to national TV advertising in 2010, after a 14-year hiatus, buying spots on popular programs such as "American Idol."
The heavy Nook investment has squeezed Barnes & Noble's bottom line.
Barnes & Noble said in a statement on Thursday it was "in discussions with strategic partners including publishers, retailers and technology companies in international markets." It said that could lead to expanding the Nook business overseas.
What's the "Next Chapter"?
The Journal reports Barnes & Noble is also considering a plan to spin off its Nook business. If it does, can it make a profit selling books the old-fashioned way? If it doesn't, does if have the resources to compete against Amazon and Apple?
Either way, the "Next Chapter" for Barnes & Noble just might be bankruptcy court. It took me a second to catch the play on words in the WSJ article because the first thought I had was "Chapter 7" and a word was missing.
Bear in mind, even if that happens, it can take years to play out. GM was terminally ill for a decade before it succumbed to the inevitable.
Digital books have surely cut a lot into their business, but I also think the entire industry would have been in serious trouble anyway simply because they're selling products that are completely "commoditized" and therefore can't be differentiated from one retailer to another.
The only way out of this dilemma might have been for publishing companies themselves to own book stores -- which would give them the ability to stock their own books on an exclusive basis and cut deals with other publishers to cross-share titles under different pricing structures.
I hope they pull it out. I bought a Nook e-reader last year and love it. I tried the Kindle and hated it. This year I bought the new Nook tablet and it’s fantastic! It has similar features as my first Nook (Wi-Fi, Web, etc.) but is more like a tablet than an e-reader. I also tried the Kindle Fire before buying the Nook and same thing; there was no comparison between the two. The Nook beat the Kindle hands down. It’s more user friendly when downloading books. Both will download books through my public library for free but the Kindle has to be redirected to Amazon to download where the Nook will download directly from the library. The Nook will also accept a 32GB micro card for more storage.
I always turn lib books around at B & N so the cover is backwards. It’s fun! I’ll miss it.
We took a huge hit in our titles last year as Borders closed. It recovered a little toward the end of the year as independents have staged a comeback. (The Borders in Cincy airport, for example, has been replaced by Heritage books, and they are stocking some of my titles).
Although my library is not really full of recently purchased Amazon books, I have quite a few. I learned that used books from Amazon are quite inexpensive and barely used.
I have two that were purchased at different times from different Amazon used book purveyors that have the frontisepiece signed by the author.
The only problem is Amazon knows what subjects I like and bugs me with suggestions for many many others. I continue to be Amazed at how easy it is. Click, read, click, click and it is ordered.
Booksellers have to take time to undo all that, you know. Have pity, will ya? :-)
I agree with you. The Kindle (with keyboard) is a very versatile tool. It is actually pretty fast at rendering web pages, as long as it is not too complicated. I do the same things you do on it (browse, calendar, notes, games, music, and of course, read!), but I have not figured out how to do email... How do you check email with it?
I hope J. C. Penny stays afloat. My wife and I really like what this store has become. We buy a lot of clothes there. I figured they were doing OK. They sell good quality merchandise for cheap. The lines were huge this season at our local Penny's. That place was always crowded with shoppers.
My ISP is Comcast, so I set up my Comcast email URL as a bookmark. I can access my inbox and read my email. I haven’t tried authoring an email yet.
I don’t do much of that since most of my reading (99%) is done at home and my laptop is nearby. But it’s nice to be sitting in my chair in front of the TV, reading, and check my email on my Kindle if I’m expecting something. Also check my Facebook page as well.
I also maintain websites for three service organizations in town, as well as Facebook groups for each. I keep those websites bookmarked on my Kindle so I can directly access them should the need arise. My problem is, I’m in a small town which supposedly has free WiFi access downtown, but it’s hit-or-miss. And I can’t always get a connection when I want one.
We shop at both Penny’s and Kohl’s. As with you, we buy a lot of clothes there. Also appliances when it comes to Kohl’s. We just picked up a new toaster and electric grill at Kohl’s after the Christmas holiday. Really good prices.
My guess would be, they really have to discount deeply due to the economy and that’s what’s hurting their profitability. I may be wrong, but it would seem that way to me.
Agreed!
I love my new Kindle, and the ability to read pretty much anything I want to. No going to the stacks at the library to track down an article, or going in to buy the next in the series of my favorite sci-fi or detective novels - I just find it online and download it. It’s fantastic!
Ah, web email. That is what I thought. I was hoping that you had found an email app that I wasn’t aware of...
I have the 3G option on mine, and it is great for browing when wi-fi is not available.
I relucantly concur, but will be sad to see them go. I like physical book stores, but go to them less and less. And I almost never buy a book without seeing what it costs online and what the customer reviews say. The few purchases I make at physical bookstores these days are “guilt” purchases. That is a sure sign they are on the way out.
I agree. All one needs is an internet connection to buy ebooks. That should be easy.
The bookstore experience has just gotten better and better — just not for selling books.
As you said, the books should be there for browsing and then buying online, either the eversion or paper.
I also think there should continue to be the bargain/remainder aisles. Everyone likes to pick up a physical book, especially coffee table type books, at a very low price. Every year for Christmas and birthdays, we buy our kids an interesting reference book out of the bargain bin — this year “Small Arms of the World,” for example. Believe or not, these books get used! But I would never pay “full” price for them.
The cafe and venue aspects should be focused on as the moneymaker. Some of the floorspace should be converted to a small enclosed venue with a stage and soundsystem where singer/songwriters and other performers can play shows for a small ticket price (much like some true coffeehouses). Also this venue could show films, classic, foreign etc.
Bottom line is these companies should realize they have a valuable asset in the bookstore experience for consumers, but they need to quickly figure out that they are not going to be able to depend on physical bookselling as a revenue source.
Many people “sample” books at the bookstore, see something they like, pull out their smartphone and order it from Amazon right then and there.
I also maintain my Kiwanis club’s monthly newsletter and keep a copy on my Kindle (PDF). Do either of you use Calibre? It’s one heck of a database application, which will also sync to your reader as well as convert from one format (say Kindle MOBI or Nook ePUB) to another (those that aren’t protected by DRM).
We always have FR! ;p
I started out with a Nook. Liked it, but it was a devil to use the “keyboard” that made you move a cursor around to spell a word. Went to the Kindle with the little keyboard ... perfect. But while making that change, I moved from B&N to Amazon to use the WhisperNet, etc.
In my case, B&N lost business (and I have over 200 books in my Kindle) BECAUSE of the Nook!
Before smartphones, they used to have to go home and order it from their home computer. Nowadays people can just scan the barcode and order it from the cheapest retailer right from their phone. At least I think they can do this. I just might be the last American without a smartphone (and I'll probably break down and get one sometime this year).
Have you even tried one with e-ink? I am not talking about the backlit tablets like iPad etc. that people think you can read books on. I am talking about the original e-ink style Kindles etc.
I just can’t read paper books anymore. E-ink is actually better for your eyes than paper books, especially if reading outside - much less glare. The light weight is so much better than holding up a paper book. The ability to make notes, look up words and more on the fly, trumps anything with paper books.
Sorry, you don’t like it, but I’m not going back.
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