Sales plummeted at Barnes & Noble Inc bookstores in the latest quarter and its Nook ebook devices failed to keep up with competitors, pushing the company to a net loss that more than doubled from a year ago.
The largest traditional US bookseller said on Tuesday that it will stop making its own Nook color touchscreen tablets as a result, a move intended to stem the losses it is suffering from its digital unit.
It said it will continue to make its more basic, black-and-white ebook readers but farm out the tablet manufacturing to a third party.
“We know this is a sizable change from our existing strategy,” chief executive officer William Lynch said in a call with analysts. He declined to give specifics on how the tablet partnership would work because the company is in discussions with “a lot of interested parties.”
The about-face troubled investors, who sent Barnes & Noble’s stock price down more than 15 percent to US$15.88.
According to research firm IDC, Barnes & Noble’s Nook tablet shipments fell to 1 million in the fourth quarter, down from 1.4 million a year earlier. At the same time, sales of Amazon.com Inc’s Kindle ebook readers have kept growing.
There were signs that Barnes & Noble was seeking to exit the hardware business.
This month, the company slashed prices on its Nook readers, leading some to suggest that it was clearing out its stock of tablets.
On Tuesday, the company said it planned to sell its remaining inventory at the reduced prices. Some have speculated that Microsoft Corp, which has a 6.8 percent stake in the Nook unit, could offer to buy it outright.
In the broader ebook market from the largest publishers, Barnes & Noble has said it has about 25 percent of content sales. However, it admitted that figure has been under pressure from Apple Inc and Amazon lately.
“We’re holding our own, but it’s declined slightly,” chief financial officer Michael Huseby said.
The company declined to say how its device sales split between tablets and dedicated ebook readers. However, it said its “biggest readers” use ebook readers, which drive a majority of its content sales.
Meanwhile, its bookstores also saw sales decline. Revenue at stores open at least a year, a key metric, fell 8.8 percent during the period. It also warned it expects that figure to decline in the “high-single digits” for its fiscal next year, partly as a result of tough comparisons with last year.
Overall retail sales, which include Barnes & Noble bookstores and online sales, declined 10 percent, in part because of store closings.
For the February to April quarter, Barnes & Noble said its net loss totaled US$118.6 million, or US$2.11 per share. That compares with a loss of US$56.9 million, or US$1.06 per share, last year.
Revenue fell 7 percent to US$1.28 billion.