Barnes & Noble Inc. is expanding its e-commerce footprint in higher education with the goal of targeting a younger audience.
The bookseller announced plans to invest in 5-year-old Flashnotes Inc., creating a strategic partnership with the online marketplace where college students buy and sell study materials from each other for individual courses. The move is expected to bolster sales in Barnes & Noble’s College division, where sales increased by 7.2% year over year in Q3 2015, to $521 million from $486.2 million. Barnes & Noble is No. 28 in the Internet Retailer 2014 Top 500 Guide.
On the retailer’s Q3 2015 earnings call, CEO Michael Huseby said the investment in Flashnotes could be a sign of things to come as Barnes & Noble looks to take a greater share of the higher education pie.
“Barnes & Noble Education, which currently consists of our College business, is expected to grow both organically through new school contracts and through potential merger and acquisition activity in a fast-growing educational services market,” Huseby told analysts, according to a transcript of the call obtained from Seeking Alpha. “Flashnotes is a great example of partnerships we can leverage to grow the College business.”
Last month, the retailer announced plans to spin off its college business from the Nook and retail units to create separate publicly traded companies. Barnes & Noble expects that transition to be finalized by the end of the summer.
Sales in Barnes & Noble’s Nook division, which includes digital content as well as devices and accessories, continued to struggle, although the sales decline slowed from Q2 2015, when Nook sales dropped 63.7%. In its third-quarter earnings filing, Nook division sales declined 50.6% on sales of $77.5 million compared with $156.9 million during the same period last year.
Chief financial officer Allen Lindstrom told analysts that digital content sales dropped 29.3% year over year during the quarter, though he did not specify a dollar figure.
Barnes & Noble late last year bought back all of its Nook shares from Microsoft in a cash-and-stock package valued at a reported $117 million. On the earnings call, Huseby said changes could be coming to the Nook business in the wake of the company launching an Android app last week.
“We’re still in conversations about distributing the Nook app over different, larger-scale platforms,” he said. “We remain committed to supporting the Nook product, which remains an integral part of our future because it is important to our customers.”
For the third quarter of fiscal 2015 ending Jan. 31, Barnes & Noble, which does not break out online sales, reported:
- Retail sales, which includes e-commerce, of $1.396 billion, down 1% from $1.410 billion during the same period last year.
- Overall sales of $1.961 billion, down 1.8% from $1.996 billion during the same period last year.