They may be the largest bookseller in the world, but as of today, Barnes & Noble’s (NYSE:BKS) shares are hardly worth writing home about. As of 4:02PM EST, shares in the company plunged a worrying -13.85%, bringing the last price to $5.60. So what happened in the Christmas season to induce such a fall?
Barnes & Noble, established in New York city in 1917, has maintained a vice-like grip on US book sales for decades. More recently, it has made a move into the digital era, launching its NOOK eBook brand and dedicated eReading tablets. A wise move, for sure, as e-book sales accounted for 25.8% of total worldwide book sales from the beginning of this year, rocketing up from 12.3% in 2013, according to Statista.
Yet despite having its foot in the door of both the paper and digital market, Barnes & Noble have still suffered a shocking share drop. This comes after their announcement yesterday which revealed such poor Christmas performance. What gives? Well, approximately half of the sales decline can be attributed not to books but to other tangible wares such as DVDs, gifts, and music sales. Market decline in such products has been seen before, notably in the UK’s HMV stores, which went into administration back in 2009. Eight years on, if not even the Christmas season can save this particular market and things are not looking promising. Back on books, though, it is likely the Barnes & Noble are struggling to compete with eBook giant Amazon (NASDAQ:AMZN) when it comes to digital sales.
But there is light at the end of the tunnel. In March last year, dozens of reports surfaced amid growing sales of physical books. Indeed, unit sales in the first half of 2017 were 3% higher than they were in the same period of 2016. Even now, physical copies continue to outsell their digital counterparts. This is absolutely Barnes & Noble’s territory, and it may not be too late to drive an aggressive marketing campaign in this direction.
The Christmas season is always a crucial time for any company. If performance over this period isn’t strong, investors will begin to grow unsettled, so it is no surprise that shares are continuing to falter. Barnes & Noble will have to enact a strategy to turn this around, and it will be interesting to see what happens with the book industry as a whole as 2018 continues. Check back to see if the digital market will proliferate further and if Barnes & Noble will take further steps in this direction while Amazon maintains a huge presence.
Featured Image: twitter
