Barnes & Noble (B & N) reported strong sales figures for its Nook e-readers and devices over the holiday quarter that ended on Jan. 28, 2012. Along with this news, B & N has announced it will lower the cost of its Nook tablets.
Numbers at a Glance
B & N reported the following:
- Nook business sales, including e-books and devices, increased by 38 percent. The increase led to the company generating $542 million in revenue.
- Physical book sales at the company’s 720 superstores increased by 4.2 percent.
- William Lynch, the company’s Chief Executive, reported that B & N now holds between 27 to 30 percent of the U.S. digital books market.
B & N’s Latest Strategy
- The company has lowered the price of its Nook Color e-reader to $162 from $199.
- In November, the company announced the Nook tablet will cost $199 – this is $50 less than the first version. The new tablet will have half the memory capacity of the first version, putting this Nook on the same footing as Amazon’s Kindle Fire in both memory and price.
Concluding Thoughts
Consumers will see if the above moves will benefit B & N in the long run. The company saw an increase in sales thanks to the demise of Borders in September.
When it comes to the ongoing tablet wars, a price decrease does not always generate sales. This move has not worked well for Research in Motion (RIM) and its PlayBook. B & N has also stated that it increased its sales, administrative and advertising costs from 25.3 percent to 34.1 percent a year earlier. By lowering the costs of its Nooks, and knowing the company needs to cover the increase in other costs, it is banking on consumer confidence. In April, B & N is expected to report $1.5 billion for the fiscal year. We should know then if these price cuts turn out to be a good move for this retailer.
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