Barnes & Noble released some mixed news Friday morning, announcing an $89.5 million investment in its Nook Media subsidiary, while also reporting that it expects holiday sales to fall below expectations and that results in its Nook business will not meet forecasts for fiscal 2013.
Pearson’s investment will give the company a 5% stake in Nook Media, making it the third investor in the company; B&N’s stake will slip to 78.2% and Microsoft’s stake will become 16.8%. Under the agreement, Pearson also receives warrants to acquire another 5% of the company based on a valuation of $1.789 billion and subject to certain conditions.
In prepared statements, B&N CEO William Lynch and Pearson North America head Will Ethridge both said they were excited about the partnership. In a regulatory filing, B&N said that with the agreement, Nook Media would begin distributing Pearson content. Pearson is the world’s largest educational publishing company with substantial assets in both the higher education and el-hi markets. In his statement, Ethridge observed that, “with this investment we have entered into a commercial agreement with Nook Media that will allow our two companies to work closely together in order to create a more seamless and effective experience for students. It is another example of our strategy of making our content and services broadly available to students and faculty through a wide range of distribution partners."
B&N had little more to say about the weaker than expected holiday sales. Thanksgiving weekend sales had gotten off to a good start, with unit sales of Nook devices double that of the previous year. Still, B&N was expecting comp sales in its trade stores to be down slightly. Sales in the Nook segment for the first half of fiscal 2013 were $352 million, but B&N had not provided more guidance on growth for the year. B&N will release holiday sales January 3.