While we remain committed to providing a great digital reading experience to our customers, we are exploring all opportunities to reduce costs.
That’s the sound of Barnes and Noble CEO Ron Boire sounding the retreat from the firm’s ill-advised venture into competing with Amazon’s Kindle with its own NOOK e-reader.
While his comments are simply reflective of an ongoing shift away by the firm from its digital disappointment, what is interesting is how many actions are now being taken to achieve this. Boire states bluntly:
Our first priority is to significantly improve NOOK performance. During the third quarter, we reduced NOOK expenses by $25 million and recently took additional action to exit NOOK’s app and video businesses that will result in additional cost savings…we are actively engaged in exploring a number of alternatives to materially reduce NOOK’s expense structure.
It’s easy to see why this is the case. While the third quarter saw B&N turn in increased profits of $80.3 million, up from $72.2 million year-on-year, total sales fell 1.8% to $1.41 billion, attributable in large part to poor online sales offsetting decent offline activity in-store. Breaking down the numbers:
- NOOK sales decreased 33% year-on-year to $52 million for the quarter.
- Digital content sales decreased23%, to $31 million.
- Device and accessory sales decreased 44% to $21 million on lower unit sales and lower average selling prices.
- Online sales overall declined 12.5%.
So action is required – and it’s starting to kick in soon. B&N customers need to get used to some big changes coming up next week – 15 March to be precise. That’s when the firm will no longer offer third party applications from the Nook Store. That’s a decision fuelled by the success of Google’s Play Store which runs on B&N devices and has been inevitably far more successful.