Barnes & Noble's Nook flops during holidays

  @julpepitone January 3, 2013: 12:00 PM ET
barnes noble nook
NEW YORK (CNNMoney)

Barnes & Noble got coal in its stocking this holiday season, in the form of disappointing sales that were dragged lower by the slumping Nook e-reader.

Revenue from the bookseller's brick-and-mortar stores and BN.com totaled $1.2 billion during the final nine weeks of 2012, falling by nearly 11% from the same period a year ago.

Nook sales in particular "fell short of the company's expectations," Barnes & Noble (BKS, Fortune 500) said in its press release Thursday. The company's Nook business, which includes both e-readers and digital content like e-books, suffered a 12.6% sales decline over 2011, bringing in just $311 million.

The weakness in the Nook business was specifically due to poor tablet sales, Barnes & Noble said, though the company didn't break out how many Nooks it sold or how much those sales declined. Digital content sales -- including books, movies and magazines -- increased 13.1% over the year.

"Nook device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday," said Barnes & Noble CEO William Lynch, in a prepared statement. "We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward."

The poor showing comes as a big blow to Barnes & Noble, which was banking on the new Nook HD product line the company revealed in September. The tablets feature big improvements over the previous generation: much crisper screen resolution, a video streaming service and a new nine-inch tablet size. The entry-level Nook HD starts at $199, the same price at which the previous Nook line debuted.

Both the Nook HD's beefed-up hardware and marketing language were squarely aimed at chief tablet rivals Amazon (AMZN, Fortune 500) and Apple (AAPL, Fortune 500).

"[The HD+ is] nearly half the cost of the leading large-format tablet, [and] both products deliver an amazing value for customers, with no annoying ads," Barnes & Noble's September press release crowed. That "leading large format tablet" is of course Apple's 9.7-inch-screen iPad, which retails for $499. The "annoying ads" tablets are Amazon's Kindle Fire line, which include discounted devices that feature ads on some screens. To top of page



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