I haven't done one of these "state of the business" posts for a while but it looks like the time has come. I've seen Barnes and Noble in the business news several times lately and even received one of those trashy chain-letter emails that warned me that Barnes and Noble is among a group of companies that are in danger of folding before all those Christmas gift cards can be used up. Ridiculous as that notion sounds on the surface, it did grab my attention since that's been the gift-of-choice that I most often receive from my wife and daughters.And now I see on the Forbes.com website that the latest Barnes and Noble numbers are downright ugly:
Barnes & Noble just reported a third-quarter loss of $18.4 million, or 34 cents per share, compared with profit of $4.4 million, or 7 cents per share, a year earlier.The family has already decided to cut back on Christmas gifts this year, concentrating only on giving the three little ones a good Christmas, so I was not going to receive the usual B&N gift cards this year anyway. But if this were a more normal year, I might have suggested avoiding the cards after seeing numbers like these and knowing how tough it has been in recent years for even Barnes and Noble and Borders to turn a profit.
Same-store sales fell 7.4% for the quarter. Barnes & Noble said a significant drop-off in customer traffic and consumer spending affected its business in the third quarter. Management says it is taking measures to reduce expenses for the rest of this year and next.
Come to think of it, I don't hear much about Barnes and Noble wanting to acquire Borders anymore.
Just a quick aside - There are two Barnes and Noble stores in my immediate area and I live almost exactly between the two so I shop at both of them on a regular basis. The two stores are a lot alike, of course, but there is one huge difference that continues to irritate me. One store includes almost no fiction in its publishers' remainders section and the other one is filled with it. I really like shopping the markdowns and always get a kick when I find a title that I couldn't afford at full price there in the stacks of cheap books. I even mentioned to the store manager who seems to avoid mark-downed fiction that he was pushing me to the other location but he just "politely" blew me off with some kind of excuse I don't even remember now.
I wonder if it's up to each store manager to determine how much emphasis to give to the publishers' remainders or if there is a Barnes and Noble store policy regarding the books. Anyone know the answer?
I don't know how it works in the big-name bookstores, but I used to work at a store that contained only remainders and mildly damaged books (usually without dust jackets). We never had any idea what was going to show up -- none, whatsoever. They were bought in lots, not as individual titles. So, it might be the buyer for a certain district who just happens to choose lots without much fiction. Hard to say.
ReplyDeleteBKS aggregate numbers hide some ups and downs. Online sales are actually UP by 2%. This story is not just about the downturn. It's also about the migration from bricks-and-mortar to web purchasing.
ReplyDeletePublisher Remainders - for the most part, we don't have much say in what gets sent. However, if we think we need more fiction, we can request more fiction. In addition, we can "shortlist" specific titles into the store if we think they will sell.
ReplyDeleteBarnes & Noble - we were told we are alright. The owner sent out an email saying that B&N was doing well enough to weather the financial downturn for at least two years, and that there would not be store closings and layoffs beyond what would normally be expected in positve economic situation.
In addition, some co-workers and I were talking, and since Borders is much worse off than us, we think they'll close long before B&N, which would give B&N their customers and improve our financial situation.
From where I sit, B&N is safe. Our numbers this holiday season have been steady and not much lower than last year's.
That email going around is probably mostly junk, and will only serve to unnecessarily decrease consumer confidence even more. It's harmful, in my opinion.
In addition, Mr. Riggio stated that Barnes & Noble had already made a profit this year, and had not yet needed the help of any creditors.
ReplyDeleteI don't understand stocks and stuff, but I wonder if your numbers are accurate?
Sorry, this is a touchy subject for me - my future being at stake and all.
Annie, thanks for the info on B&N remainders policy. From what you say, it sounds like my particular store manager isn't asking for much of the available stock in fiction remainders. I think the guy is a pretty poor store manager overall so this doesn't surprise me.
ReplyDeleteAs for that email: DEFINITELY JUNK - it includes some old information on stores that closed months ago, for example, making it seem that some chains still have the worst to come just after Christmas. It's been pretty much debunked now.
As for the numbers, they are accurate. Forbes wouldn't make that kind of mistake.
Do note that the loss is for the third quarter only and it does not mean that the chain will lose money for the whole fiscal year. I think that the fourth quarter is likely to be a bad one, too, because things don't seem to have bottomed out yet for the overall economy. If the first two quarters were strong enough, B&N can certainly be in the black for the year.
Even if that doesn't happen, B&N is very likely strong enough to weather the storm for a while, as you say. I think your comments about Borders are accurate - and I think it would be a mistake for B&N to acquire that chain right now. It would be like an anchor, if not a hole in the boat, in an economy like this one.
Sorry to have spooked you a bit...
Thanks for the info, bookfool. From what you and Annie say, it sounds like the store manager here has made his own decision to limit markdowns in fiction in his particular store. Thankfully, the other B&N manager near me sees it just the opposite - and he'll be rewarded with the bulk of my business.
ReplyDeleteGood point, Derek, especially as regards same-store sales.
ReplyDeleteA quick note on B&N remainders:
ReplyDeleteA SMs hands are never tied. S/he can always request a different product mix from the buyer. If that doesn't work, it takes about four seconds to search for "BG Fiction" and shortlist to your heart's content. B&N keeps thousands upon thousands of remainders in stock in their Distribution Center in Monroe, NJ. You can even add a specific date range (in the "advanced search") to ensure that you are only seeing the most recent stuff.
Your SM obviously doesn't care/know enough to satisfy his customers. Fortunately for B&N, such situations are rare.
Despite your comment on the O'Reilly post, anonymous, I want to thank you for the information regarding the B&N procedure on remainders stock per store.
ReplyDeleteLooks like the B&N manager here is a bigger doofuss than I already knew him to be from prior experience and conversation. The difference between his store and the other one I shop at is huge, in every way, and I wonder how the man keeps his job.
Interesting story Sam. I have put a link to your story on my blog down here in New Zealand.
ReplyDeleteAll best,
The Bookman
Thanks for the link, Mr. Bookman. :-)
ReplyDeleteAnd all my best to New Zealand.