Barnes & Noble does business by the book and the NOOK. As the #1 bookstore chain in the US, it operates 650 Barnes & Noble superstores, in all 50 states and Washington, DC. Stores range in size from 3,000 sq. ft. to 60,000 sq. ft. and stock between 22,000 and 163,000 book titles. It also sells books and other media online. The company's digital subsidiary, NOOK Media, develops, supports, and creates digital content and products for the digital reading and digital education markets. Heavy losses have led the company to restructure its operations. In 2015 it spun off its education division (which oversees the college bookstores unit Barnes & Noble College Booksellers) as Barnes & Noble Education.
Barnes & Noble's retail segment includes 650 bookstores under the Barnes & Noble Booksellers trade name. Barnes & Noble bookstores generally offer a dedicated NOOK (digital) area, a comprehensive trade book title base, a café, and departments dedicated to Juvenile, Toys & Games, DVDs, Music, Gift, Magazine and Bargain products. The stores also offer a calendar of ongoing events, including author appearances and children’s activities. The retail segment also includes the company’s eCommerce website, barnesandnoble.com, and its publishing operation, Sterling Publishing.
The company's NOOK Media segment (launched in 2009) includes Barnes & Noble's digital business, such as its eBookstore, digital newsstand and sales of NOOK devices and accessories. The underlying strategy of the NOOK business is to offer customers any digital book, newspaper or magazine, anytime, on any device.
Barnes & Noble's net sales have consistently declined since 2012.
In fiscal 2015 its revenues net sales decreased by 5% due to lower Retail and NOOK segment sales.
Retail sales (68% of total 2015 sales) declined by 4%, primarily due to a decrease in comparable store sales, closed stores, and lower online sales.
NOOK sales (4%) decreased by 48% as the result of a 67% sales slump in device, accessories, and digital content sales due to lower lower unit sales.
Barnes & Noble's net income increased by 177% in fiscal 2015, thanks to a gain from a loss experienced in the previous year. The primary reason was due to decreased selling and administrative expenses and depreciation and amortization expenses and Interest expense, and amortization of deferred financing fees.
Depreciation and amortization decreased due to fully depreciated assets and retail store closings, partially offset by additional capital expenditures.
Selling and administrative expenses decreased by $61.8 million. The current year included $11.5 million of separation related costs.
Net interest expense and amortization of deferred financing fees decreased by 39% due to lower interest related to the repayment of debt, lower average borrowings, and a terminated Microsoft commercial agreement.
In fiscal 2015, Barnes & Noble's net cash provided by the operating activities decreased by 83% due to a change in operating assets and liabilities.
To address dynamic changes in the book selling industry, Barnes & Noble has transformed its business from a store-based model to a multi-channel model centered on its retail stores, Internet, and digital commerce. Barnes & Noble’s strategy is to use its strong brand and retail footprint to attract customers to its multi-channel platform; expand its distribution channels through strategic partnerships with world-class hardware and software companies and retail partners; drive content sales through the web, NOOK Readers and third-party devices; and use its infrastructure to deliver digital content to customers.
The company has invested significant capital in its systems and technology by building new platforms, implementing new software applications and building and maintaining efficient distribution centers. This has enabled the Barnes & Noble to source most of its inventory through its own distribution centers, resulting in direct buying from vendors rather than wholesalers.
Its NOOK business acquires the rights to distribute digital content from publishers and distributes the content on barnesandnoble.com, NOOK devices and other eBookstore platforms. The majority of Barnes & Noble's eBook sales are sold under the agency model.
In 2015 Barnes & Noble launched a brand new Free NOOK Reading App 4.0 for Android. The NOOK Reading App 4.0 for Android supports a “read everywhere” strategy by bringing a unified NOOK experience to Android smartphones and tablets.
To raise cash, Barnes and Nobles spun off its education division in August 2015 to enable Barnes & Noble Education to set up a capital structure that is tailored to that company’s needs, separate from the more retail-focused needs of Barnes and Nobles. Barnes & Noble Education (though its flagship Barnes & Noble College Booksellers), serves more than 5 million students and faculty members in 724 campus stores across the US.
Barnes & Noble's ambitious attempt to compete with Amazon.com (the maker of the market leading Kindle e-reader), Apple, and Google in the e-reader and tablet markets, seemed to end in July 2013 with the resignation of William Lynch, the company's CEO and architect of its digital strategy, and the announcement that the company will stop making color NOOK devices. While the NOOK business initially looked to be a big success, growing to capture about a quarter of the e-book market, it was capital intensive and led the steep losses by the company. However, in 2014, NOOK teamed up with Samsung Electonics, selecting Samsung tablet devices to be customized and co-branded by NOOK Digital. Such devices are produced by Samsung. The co-branded NOOK tablet devices are sold by NOOK Digital through Barnes & Noble retail stores, www.barnesandnoble.com, www.nook.com and other Barnes & Noble and NOOK Media websites. NOOK Digital and Samsung agreed to develop co-branded Samsung Galaxy Tab 4 NOOK tablets as the initial co-branded devices.
Despite putting the company up for sale back in 2010, Barnes & Noble has yet to find a buyer. The lengthy search for a suitor by the #1 US bookstore chain reflects the uncertain outlook for bookstores.