Tags: Barnes | Noble | Nook | e-reader

Barnes & Noble Betting On Nook E-Reader Sales

By    |   Thursday, 16 February 2012 08:25 AM

Barnes & Noble (BKS) is often described as “still living” in spite of a surge in competition from online sellers and pronouncements of the death of bookstores. Now it is betting on Nook e-reader sales to turn the company around.

Barnes & Noble, based in New York, is the biggest bookstore chain in the United States, holding out even as Crown Books, Walden Books and Borders have collapsed.

Analysts say this as a sign of its endurance and ability to adapt to a transformation of the book publishing and retailing industries to e-books and e-readers.

Yet to grow, Barnes & Noble must take on Seattle online giant Amazon (AMZN). The virtual retailer is thought to have a brighter future in the online sale of hard copy and e-books due to its larger presence and competitive prices.

Barnes & Noble started selling books online in the 1980s and ramped up the effort in 1997 with a web site. It then entered the e-book business with the launch of the Nook e-reader in November 2009, two years after Amazon with its Kindle but two months before Apple (AAPL) launched the iPad tablet.

Barnes & Noble has an estimated 27 percent share of the U.S. e-book market, earning best-in-market ratings for its Nook from independent reviewers such as PC World.

This is helping to maintain profits even as its 1,341 bookstores across the country struggle to perform. Revenue from the Nook unit, including e-books and devices and its online platform, rose 17 percent to $206 million in the 13 weeks ended Oct. 29, 2011.

Sales in stores fell 1 percent to $918 million for books and 4 percent to $768 million for textbooks. Losses narrowed to $6.6 million from $12.6 million over the same period.

Expanding overseas

The company is putting more focus on the Nook, with plans to launch a new version this year, boost its e-book offerings and expand e-reader sales overseas, likely starting in Britain.

A challenge is Amazon, which since 2009 has stepped up its publishing efforts and is amassing exclusive rights for titles sold over Kindle. Barnes & Noble counterattacked in January by saying it won’t stock books published by Amazon Publishing at its stores, only online.

Analysts warn that the move could backfire if Amazon puts out a hit that drives traffic away from Barnes & Noble stores.

Analysts are mixed on the prospects of Barnes and Noble. Of the seven analysts followed by Thomson/First Call, two have strong buy recommendations and one has a buy, while two say hold and another underperform.

The company next reports on Feb. 21.

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