Struggling bookseller Barnes & Noble Inc. says e-commerce sales fell 11% year over year in its first quarter of fiscal 2018, as the company continues to face declining store traffic and what it calls a “challenging retail environment.”
Margins improved in its online business, however, as the retailer says it ran fewer promotions during the period ended July 29. Comparable-store sales fell 5.9% year over year, on lower store traffic.
In its earnings call with analysts, company executives described new features rolled out in June as part of a phased implementation of a website redesign. Most are aimed at increasing its conversion rate, such as a new product page design with a simple layout and improved navigation.
The company also says its test, now in 60 stores, of shipping online orders from store inventory is working for customers and the retailer, as it’s able to deliver items to consumers faster, at a lower cost. Barnes & Noble, No. 54 in the Internet Retailer 2017 Top 1000, will continue to roll out other tests to enhance its omnichannel capabilities, although it didn’t give specifics.
CEO Demos Parneros would not comment on any direct sales impact related to web leader Amazon.com Inc.’s new physical stores in Manhattan. “I think it’s a different kind of bookstore,” he said on the call, which was transcribed by SeekingAlpha. “Our stores are really much more about discovery and spending time walking through stores and examining different categories. I think their stores are much smaller and they have a different purpose. We’re focused on reinventing our new prototype store, which will be bigger than those stores but smaller than our existing average store. I’d say it’s too soon to see any impact from the stores they’ve opened.”
The decline in fiscal Q1 2018 web sales follows a somewhat brighter Q4 and full-year 2017 for Barnes & Noble’s web business. Online sales grew 2.9% in the fourth quarter and 3.7% for the full year. Barnes & Noble attributed its e-commerce sales increase in fiscal 2017 to unspecified website improvements and increased promotional activity. Those gains follow 14% and 15% declines in the previous two years.
For the period ended July 29, Barnes & Noble reported:
- An online sales decline of 11.3%, or $7.1 million. That would indicate e-commerce sales were roughly $55.7 million in its first fiscal quarter, compared with $62.8 million last year.
- Total sales of $853.3 million, down 6.6% from $913.9 million.
- Net loss of $10.8 million, versus a loss of $14.4 million.