Argir said. One of the goals of the redesign will be to make
bn.com more mobile friendly—nearly half of the traffic to the
site in the third quarter came from mobile devices, Argir noted.
Cost cuts are not just coming at the Nook unit. B&N has
hired Accenture to find ways to reduce expenses throughout
the supply chain, without disrupting the business. The company
has set a target of reducing SG&A costs (selling, general, and
administrative costs) by $30 million in fiscal 2017.
Boire did not provide too many details about the new concept
stores, noting only that B&N will open four outlets through
fiscal 2017, with the first store set to be opened by late summer.
B&N is spending about $2 million to open each store. With
the opening of four concept stores in fiscal 2017, B&N expects
the net reduction in stores to be 10. It will close eight stores
this year, its lowest number since 2000.
The biggest sales gains in the third quarter came from nonbook
products such as toys and games, gifts, and vinyl music, which
all had double-digit increases in the quarter, though sales
of adult coloring books were also strong in the period. Sales of
adult trade and juvenile titles fell in the period. Overall, comparable store sales at B&N rose 0.2% in the quarter, but
excluding Nook products comps were up 1.3%.
Though B&N will continue to tweak its nonbook offerings,
Boire said books are “the soul of the company and always will
be, both in the stores and online.” Jamie Carey, chief operating
officer, said he thinks the inventory mix at the stores is “about
right” and noted that one of the merchandising initiatives for
the year will be to make sure “the very best books are brought
forward.” —Jim Milliot
News
B&N Gets Ready
For Its Next Act
Cutting Nook, revamping bn.com, and
opening concept stores are priorities for
fiscal 2017
With a relatively good holiday season behind him, Barnes & Noble CEO Ron Boire is poised to accelerate the rate of change at the country’s largest physical bookstore chain.
Among Boire’s priorities are rightsizing the Nook business,
overhauling the consumer e-commerce experience, finding more
operating efficiencies throughout the supply chain, and opening
four new concept stores by next April, the end of fiscal 2017.
The priorities reflect some of the problems B&N still needs
to overcome, as seen in its fiscal third-quarter results (for the
period ended Jan. 30, 2016), in which total sales fell 1.8%
compared to last year’s third quarter, but profits rose. Though
B&N has significantly cut losses in its Nook segment, including
in the third quarter, the division lost almost $50 million in the
first nine months of fiscal 2016. In a conference call discussing
third-quarter results and in an interview with PW, Boire, who
took over as CEO last September, and other B&N executives
said the company is exploring all options to lower Nook’s costs.
Concrete steps that B&N has already taken are exiting the
e-book business in the U.K. and closing the Nook app and
video businesses. Boire said that although B&N is still committed to selling digital content, Nook’s operating structure
needs to be significantly reduced. In the third quarter, Nook
sales fell 33.3% as sales of hardware declined 44% and content
sales dropped 23%. When B&N finds the correct size for Nook,
“we will pivot to see what the right growth strategy will be,”
Boire said.
Sales through B&N’s retail stores dipped 1.2% in the quarter,
and the loss was attributed to store closures and declining sales
at bn.com. The relaunch of the site last summer did not go well,
forcing the company to fix numerous glitches and causing a drop
in online sales. Despite improvements made since the fall, Chief
Digital Officer Fred Argir said the site is being redesigned
again with the goal of completely overhauling the shopping
experience. “The entire journey on the site will be rearranged,”
($ in millions)
SALES
SEGMENT 3RD QTR 2015 3RD QTR 2016 CHANGE
Retail $1,395.9 $1,378.9 - 1.2%
Nook $77.5 $51.7 - 33.3%
Total $1,440.1 $1,413.9 - 1.8%
EBITDA
SEGMENT 3RD QTR 2015 3RD QTR 2016 CHANGE
Retail $195.4 $180.2 -7.7%
Nook ($29.0) ($11.1) –
Total $166.3 $169.0 1.6%
BARNES & NOBLE INC. SEGMENT RESULTS,
THIRD QUARTER, FISCAL 2015 V. 2016
SOURCE: BARNES & NOBLE