Revenue at Barnes & Noble fell 7% in the first quarter ended August 2, to $1.23 billion, but the retailer cut its net loss to $28.4 million from $87.0 million in the first period of fiscal 2014.
The company also reported that it hopes to announce a strategy for its Nook Media business by the first quarter of 2015, but that there are no assurances a final decision will be announced in that period. B&N said that as it looks to the future of Nook Media (which includes the Nook segment, as well as College Bookstores), it is talking to Nook partners, which include Microsoft and Pearson, as well as third parties.
On the operating level, EBITDA in its retail trade store rose 2.1%, to $66.1 million, while revenue fell 5.3%, $954.8 million. B&N attributed the sales decrease to a comparable store sales decline of 5.1%, store closures and lower online sales, partially offset by a $7 million recognized contingent profit with a warranty service provider. Comparable store sales declined primarily due to lower sales of Nook products. Core comp sales, which exclude sales of Nook products, decreased 0.4% for the quarter. CEO Mike Huseby said improving physical book industry trends and B&N merchandising initiatives contributed to the improved EBITDA.
Expanding on Huseby's remarks, Retail CEO Mitch Klipper said that during the quarter the stores benefited from Amazon's dispute with Hachette as well as strong interest in movie tie-in titles, especially in its juvenile books department. He noted that B&N remains "encouraged" by the moderating decline in the sale of print books that first became evident at the end of fiscal 2014. Klipper also provided an update on B&N's delivery project with Google; The two companies are testing a four-hour delivery service at eight stores in Manhattan, west Los Angeles and the San Francisco Bay Area. Google has personnel at B&N stores and a fleet of trucks to fulfill orders. Klipper said B&N hopes to expand the service to other cities. The news was not so good on the ongoing update of the BN.com website. Originally set to be relaunched by the end of summer, Klipper said reworking the site has taken longer than expected and that it will delay the relaunch until after the holiday season.
The Nook segment shrank considerably in the quarter, with total sales falling 54.3%, to $70.0 million, while the EBITDA loss was reduced to $4.6 million from $54.6 million. As the company puts less emphasis on hardware sales, revenue from device and accessories decreased 78.6% from a year ago, to $18 million, while digital content sales fell 24.2%, to $52 million. The huge cut in the segment’s net loss was due to the downsizing of its hardware efforts, and the bottom line also benefitted from a lease adjustment in its Palo Alto offices of $6 million.
In the college segment, revenue was flat $226 million as comp store sales deceases 2.0%. College EBITDA losses increased to $32 million, as compared to $19 million in the prior year, due primarily to higher expenses associated with new store growth in the non-rush first quarter and continued investments in digital education, B&N said.
For the remainder of fiscal 2015, B&N said it continues to expect both retail comparable bookstore sales and retail core comparable bookstore sales to decline in the low-single digits. College comparable store sales are also expected to decline in the low-single digits. The Company expects full fiscal year EBITDA losses in the Nook segment to decline versus the prior year