Barnes & Noble Upbeat Entering Key Winter Retail Period

National bookseller Barnes & Noble Nov. 20 reported second-quarter (ended Oct. 27) operating loss of $1.5 million for its Nook business unit – down 48% from an operating loss of $2.9 million during the previous-year period. Revenue dropped nearly 17% to $21.7 million from $25.9 million last year.

The Nook segment, which includes electronic readers and tablets, in addition to digital content (movies, TV shows, music), continues to a bright spot for Barnes & Noble. The last-standing national bookstore chain continues to grapple with a changing consumer habits underscored by online entertainment and ecommerce.

Even better, legacy retail sales – which include packaged media – improved with operating loss of $26.7 million compared to an operating loss of $49.43 million last year. Revenue dipped about 2% to $753.2 million.

Chairman of the board Len Riggio, who took over control of the company following the firing of CEO Demos Parneros for alleged inappropriate behavior in the workplace, said the same-store sales decline of 1.4% was the best result since Q4 in 2016.

“While we cannot predict the outcome of the holiday, we are putting our full effort behind our holiday plans, including launching a new ad campaign,” Riggio said in a statement. “We expect this to lead to continued sales improvement during the holiday period.”

Barnes & Noble Widens Q1 Loss

Barnes & Noble Sept. 6 reported a first-quarter (ended July 28) net loss of $17 million, up 70% from a net loss of $10.7 million during the previous-year period. Revenue dropped 7% to $794 million from $853 million last year.

The national bookseller’s Nook business, which includes digital media such as TV shows and movies, narrowed its operating loss to $330,000 from an operating loss of $2.7 million last year. Revenue dropped 14% to $25.2 million from $29.5 million last year.

“We fully realize that cutting expenses does not alone provide a path to the long-term viability of any retail business. Therefore, our short and long-term focus is to grow our top line, and, by doing so, provide us the cash flow needed to grow our business,” CEO Len Riggiosaid in a statement.

Riggio said comparable store sales continue to sequentially improve each month and continued into the second quarter. Indeed, same-store sales declines narrowed each month in the fiscal quarter from 7.8%, 6.1% and 4.5%, respectively.

“Thanks are due to our team of merchants and the entire store management group from top to bottom,” he said.


F.Y.E. Q2 Fiscal Performance Undermined by Fidget Spinners

Trans World Entertainment Corp. Aug. 30 said its f.y.e. (For Your Entertainment) entertainment retail chain posted a second-quarter (ended Aug. 4) operating loss of $6.6 million, which was up 22% from an operating loss of $5.4 million during the previous-year period.

Revenue for one of the last nationwide chains primarily selling packaged media topped $50.5 million – down almost 15% from $58.9 million last year.

For the fiscal year through Aug.4, f.y.e. has upped its operating loss 22% to $12 million compared to an operating loss of $9.8 million last year. Revenue is down 15% to $104.6 million from $123.9 million.

Trans World attributed the Q2 decline in part to a 10.4% decline in total stores in operation (241 vs. 269) and a 6.7% decline in comparable store sales compared to the same quarter last year.

CEO Mike Feurer had another culprit for the revenue decline: fidget spinners. Toy gadgets comprised of a ball bearing in the center of a multi-lobed (typically two or three) flat structure made from metal or plastic designed to spin along its axis with little effort. Fidget spinners became popular in April 2017.

“Our sales results were impacted by tough comparisons due to the performance of fidget spinners, which represented 4% of sales in the second quarter of last year,” Feurer said in a statement.

Regardless, Feurer said efforts to change f.y.e.’s merchandise “point of view” from DVD, Blu-ray Disc movies, TV shows, video games and music CDs to “unique, relevant, collaborative and exclusive merchandise” has begun to yield results as sales improved Q2 throughout the quarter with July comp sales down just 0.7%.

Meanwhile,, the e-commerce platform Trans World Entertainment acquired in 2016 for $75 million, posted an operating loss of $2.7 million, compared to operating income of $98,000 last year. Revenue increased 18.6% to $51.6 million from $43.5 million.



The Nine Lives of Packaged Media

It’s been said a cat has nine lives. Apparently, so does packaged media.

Make no mistake, streaming video represents the present and future of home entertainment. The fact that the Walt Disney Co. is making branded over-the-top video a primary focus is no outlier. It’s a strategic move emulated throughout the media landscape.

“The launch of [direct-to-consumer] product … is the biggest priority of the company in 2019,” CEO Bob Iger told analysts on the Aug. 7 fiscal call.

And with good reason.

When DEG: The Digital Entertainment Group released half-year industry numbers, the trade group buttressed fiscal results with Netflix & Co.’s revenue prowess.

Indeed, SVOD revenue topped $6.1 billion through June 30 – up nearly 30% from $4.7 billion during the previous-year period. Impressive data considering every other industry metric (except digital sales) is in decline.

Upon closer inspection, however, the results showed packaged media sales of DVD and Blu-ray Disc titles topped $1.9 billion – almost 16% less than the $2.3 billion generated during last year’s period.

And yet, that tally is 65% more than what electronic sellthrough ($1.17 billion) generated, which was up about 10% from $1 billion last year.

That’s noteworthy considering packaged media has been written off on Wall Street, in the media and industrywide for more than a decade. The format is rarely mentioned – and when it is, it’s largely to emphasize its decline or as a throwback to a bygone era when buying movies and TV shows mattered.

Apparently, it still does.

Home entertainment has historically been about transactions, with studios pushing digital sales due to their higher margins than physical. Opportunities to purchase digital are everywhere, physical increasingly less so.

Some argue that the inclusion of a digital file with packaged media products underscores digital’s presence/demand. But most consumers don’t purchase a Blu-ray/DVD/Digital combo for a digital file when cheaper digital alternatives exist.

Trans World Entertainment Ups Q4 Loss

Trans World Entertainment Corp. March 22 reported a fourth-quarter (ended Feb. 3) loss of $32.3 million compared to net income of $8.9 million during the previous-year period. Revenue dipped slightly to $145.4 million from almost $147 million.

The increased loss was primarily due to a one-time non-cash $29.1 million impairment charge for certain long-lived fye assets.

New York-based TWEC operates mall-based “fye” (For Your Entertainment) retail stores and, an online retailer primarily selling through Amazon.

Retail stores, which sell packaged media, consumer electronics, video games and trend, saw same-store sales fall 10%, with revenue dropping 16.4% to $92.4 million from $110.5 million last year. The company operated 260 stores at the end of 2017 compared to 284 stores at the end of 2016.

CEO Mike Feurer said the fye continues to reduce “slow-moving” merchandise while upping “newer assortments” product categories. He said retail stores continue to be negatively impacted by declining foot traffic in malls and declining physical media sales. He said the company is the process of “re-inventing” the fye brand.

Specifically, lifestyle (trend) same-store sales declined 3%, representing 41% ($37.4 million) of sales compared to 38% last year. Electronics dipped 3%, representing 16% ($14.7 million) of revenue compared to 12% the previous year. Media sales (video and music) fell 17%, representing 43% ($39.6 million) of revenue compared to 50% last year. Music sales dropped 18% and video sales fell 16%.

“As we work through the assortment changes needed to stabilize the fye business, we have maintained focus on the balance sheet, ending the year in a favorable cash position to last year, with $31 million on hand and no debt,” Feurer said in a statement.

Meanwhile,, the ecommerce unit acquired in 2016 for $75 million, reported a net loss of $675,000 compared to income of $788,000 a year ago. Revenue increased 45% to $53 million from $36.4 million.

Nonetheless, Feuer said etailz continues to capitalize on the “rapid growth” of marketplace sales, affording TWEC with the opportunity to benefit from “explosive” long-term trends underway in retail.