Barnes & Noble Blames Adele for Weak Holiday Sales
Barnes & Noble (BKS) could have used some love from Adele over the holidays.
The bookstore chain said on Thursday that comparable store sales fell 9.1% during the holiday season (the nine weeks ended Dec. 31), a poor performance caused in part by the lack of a major CD blockbuster like 2015’s “25” by Adele, and the ebbing of the adult coloring book fad which had bolstered its year-earlier results.
The company said the Adele CD, a blockbuster that has sold about 10 million copies overall in the United States and was Barnes & Noble’s best selling CD ever, accounted for roughly 3-percentage points of that 9.1% decline.
Still, while it was not Barnes & Noble’s fault that no CD emerged as a must-have this Christmas period, the holiday results showed the chain is still struggling with long lasting problems. One of those is its persistent difficulty in getting people into its stores, especially considering how much Barnes & Noble has struggled to compete with Amazon.com (AMZN). Another was that online sales rose only 2% for the holiday period, a pace far from adequate to replace weak in-store sales, let alone challenge Amazon.
“Although books outperformed the company as a whole, we were not pleased with our results,” said Len Riggio, the founder and CEO of Barnes & Noble. He claimed that since Christmas, traffic and sales have improved and that “this most unusual retail season may be behind us.”
Riggio, the founder, chairman, top shareholder, and former CEO who returned to the company’s helm this summer after it fired a CEO after only 11 months (its third CEO to leave in three years), had blamed previous declines on election-related anxiety.
Despite efforts to contain costs, the poor holiday season prompted the bookseller to lowered its fiscal 2017 profit forecast for its retail business (which excludes its money losing Nook e-reader business): it now expects earnings before interest, taxes, depreciation and amortization to be $225 million in that part of its operations, down from a forecast made not even six weeks ago retail EBITDA would range from $240 million to $280 million.
The bookseller is trying to find its footing again, trying out food and wine sales at some stores and relaunching its web site.
But now it has another fear to contend with: its long time nemesis Amazon (AMZN) is reportedly opening a bookstore in New York’s Columbus Circle (ironically right by the location of a now closed megastore operated by defunct bookseller Borders), just the latest in a handful of physical stores media reports says the online giant has planned and a move that presages a new physical front in its efforts to steal Barnes & Noble’s market share.