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January 31, 2013

Despite a Slow Holiday for Barnes & Noble, Chase Customers Opened Their Wallets for Books

By Jacqueline Lee, Contributing Writer

Barnes & Noble reported a disappointing holiday season with revenue from its flagship product, the NOOK e-book reader, falling 12.6 percent from last year’s levels. However, the decline in Barnes & Noble’s fortunes may not necessarily mean that customers are reading fewer books.

A recent report from Chase, called the Chase Freedom Lifestyle Index, which analyzed Q4 2012 spending by Chase customers, showed that books were the top spending category among Chase customers during this year’s holiday season with a 33 percent increase over last year’s levels. Other big categories included clothing/apparel and sporting goods, with consumer electronics and toys also increasing by 65 percent and 81 percent, respectively.

“We are way beyond the point where you should see content sales accelerate. That hasn’t materialized and that’s concerning,” said analyst Peter Wahlstrom of Morningstar. “The Borders tailwind is over.”

The Wall Street Journal cited the Association of American Publishers, which reported that in 2012 the annual growth rate for e-book sales fell 34 percent over 2011 levels. According to Bowker Market Research, a surprising 59 percent of customers have no interest in buying e-books.


Image via Shutterstock

Additionally, the Pew (News - Alert) Research Center reported that while 89 percent of Americans purchased and read a physical book last year, only 30 percent recorded reading a single e-book. So have companies that banked on e-books and e-book readers like the NOOK sunk their money into the wrong product?

Jeff Bezos, when discussing Amazon’s earnings for Q4, told a very different story. He stated that e-books had become a multibillion dollar category for Amazon, up 70 percent over last year, while physical book sales increased only five percent. Of course, Amazon also has the Kindle Fire, one of the industry’s most popular mobile tablets.

Although digital books did sell for Barnes & Noble, soft demand for actual NOOK devices dragged down its holiday performance.

“They are not selling the devices, they are not selling books and traffic is down,” said Mike Shatzkin, the founder and chief executive of publishing consultant Idea Logical. “I’m looking for an optimistic sign and not seeing one. It is concerning.”

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Edited by Brooke Neuman
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