Bookstore chain and Nook eReading software provider Barnes & Noble, Inc. (BKS) on Tuesday reported a loss for the first quarter that narrowed from last year, reflecting a surge in digital content sales as well as strong sales of the "Fifty Shades of Grey" series at its bookstores.
William Lynch, chief executive officer of Barnes & Noble said, "During the first quarter, we continued to see improvement in both our rapidly growing Nook business, which saw digital content sales increase 46% during the quarter, and at our bookstores, which continue to benefit from market consolidation and strong sales of the Fifty Shades series."
Microsoft Corp. (MSFT) said in late April that it will make a $300 million investment in a newly formed subsidiary of Barnes & Noble, Newco, which includes the Nook digital and college businesses. Barnes & Noble is actively engaged in the formation of Newco and expects the Microsoft transaction to close this Fall.
Barnes & Noble retail store sales for the latest quarter increased 2 percent to $1.12 billion.
Comparable store sales for the segment grew 4.6 percent, benefiting from the liquidation of Borders' bookstores during fiscal 2012 and strong sales of the "Fifty Shades of Grey" series. The retail segment includes results from the Barnes & Noble bookstores and BN.com businesses.
Barnes & Noble College sales edged up 0.1 percent during the non-back-to-school rush period to $221 million, while comparable store sales declined 2 percent. College comparable store sales reflect the retail selling price of a new or used textbook when rented, rather than solely the rental fee received and amortized over the rental period.
Sales at the Nook segment, which consists of the company's digital business, increased 1 percent to $192 million. Digital content sales surged 46 percent from last year that include digital books, digital newsstand, and the apps business.
However, device sales declined during the quarter, reflecting lower average selling prices and production scaling issues surrounding the newly launched Glowlight product resulting in unmet demand.
Barnes & Noble's first-quarter net loss narrowed to $45.24 million or $0.78 per share from $56.61 million or $0.99 per share in the year-ago period.
On average, four analysts polled by Thomson Reuters expected the company to report loss of $0.98 per share for the quarter. Analysts' estimates typically exclude special items.
Consolidated sales for the quarter rose 2.5 percent to $1.45 billion from $1.42 billion in the same period last year, but missed analysts' consensus estimate of $1.48 billion.
Lynch added, "As announced yesterday, we are excited to expand our award winning NOOK digital bookstore and devices beyond the U.S. market and to work with U.K. retailers to bring millions of U.K. customers the best experience in digital reading."
In Tuesday's regular session, BKS is trading at $12.30, down $0.05 or 0.41 percent on a volume of 1.83 million shares.
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