The state of Barnes & Noble‘s struggling digital Nook Media business, which last week received a significant investment from Pearson, became more clear on Thursday.
The bookseller said that revenue for the Nook unit, including e-readers, digital content and accessories, fell 12.6 percent, to $311 million, during the holiday shopping season, compared with the same nine-week period a year ago. Digital content sales rose 13.1 percent, while sales of Nook devices declined.
“Nook device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday,†William Lynch, chief executive of Barnes & Noble. said in a statement. “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.â€
The company said that as result of the sales shortfall, it was forecasting Nook unit revenue of $3 billion for the fiscal year and losses “at a comparable level to fiscal year 2012.â€
The Nook business has in the past generated talk of acquisition interest or a full spinoff to Barnes & Noble shareholders. And it has attracted some big name investors. Yet the digital business has struggled to compete with Amazon.com, the leader with its Kindle e-readers, as well as with Apple and Google.
Last week, Pearson, the big British education company and publisher of The Financial Times, agreed to invest $89.5 million into Nook Media for a 5 percent stake. It was also granted warrants to buy an additional 5 percent stake.
Pearson's investment follows a $300 million investment in the Nook by Microsoft in April.
Pearson's investment valued the Nook business at $1.8 billion. That is nearly double Barnes & Noble's market value of $869 million as of Wednesday.
