Earnings Preview: Barnes & Noble 3Q results

February 26, 2013

NEW YORK (AP) -- Barnes & Noble Inc., the largest traditional U.S. bookseller, could shed more light on how its bookstores and Nook digital business units are doing when it reports its fiscal third-quarter earnings before the market opens on Thursday. Analysts expect net income and revenue to drop compared with a year ago.

WHAT TO WATCH FOR: The report comes just days after founder and Chairman Leonard Riggio said he wants to buy the bookstore and website unit of Barnes & Noble. No terms or other details have been announced, and more information may come to light on Thursday.

Barnes & Noble, based in New York, has been struggling to find its place as more readers have shifted to electronic books and competition has grown from discount stores and online rivals. The company, which has 689 bookstores in 50 states and 674 college bookstores, has been investing heavily in its Nook e-book readers and a digital library to try to carve out a niche in the current retail landscape.

In early January, Barnes & Noble released lackluster holiday sales figures. It said sales at its bookstores and website fell 10.9 percent to $1.2 billion for the nine weeks ended Dec. 29. The drop was due to an 8.2 percent drop in sales at stores open at least a year, store closings and declining online sales.

Its Nook unit, which includes the company's digital e-readers, digital content and accessories, reported $311 million in revenue for the holiday period, down 12.6 percent from a year earlier. Nook device unit sales dropped, while digital content sales — which includes digital books, digital newsstands and apps — rose 13.1 percent.

Investors may also be looking for an update on Barnes & Noble's investors.

In late December, U.K. publisher and education company Pearson said that it would pay $89.5 million for a 5 percent stake in Nook Media as it looks for a way into the potentially lucrative business of digital textbooks for schools. Microsoft holds a 16.8 percent stake in the Nook business as well.

Cable mogul John Malone's Liberty Media made a $204 million investment in the overall company in August after considering a bigger bid for the entire company.

WHY IT MATTERS: Barnes & Noble's sales of books and e-books can give insight into how well the publishing industry is doing and how it is evolving.

WHAT'S EXPECTED: Analysts expect net income of 53 cents per share on revenue of $2.40 billion, according to FactSet.

LAST YEAR'S QUARTER: In the prior year quarter, net income totaled 71 cents per share on revenue of $2.44 billion.