Barnes and Noble Reduces Inventory by 11 Percent

In their earnings conference call with investors, Barnes & Noble noted that “inventories declined $155 million or 11 percent compared to last year.” They say they were able to “improve inventory turns to the highest levels in our history” and indicated “our in stock percentage of being in stock on key titles and back list did not suffer at all” as a result. Other supply chain improvements “resulted in reduced purchases from book wholesalers which of course carry lower markups.” A good portion of the inventory reductions were in music, and the company indicated DVDs and music combined now comprise just about 8 percent of sales and is still falling.

CEO Steve Riggio addressed their digital initiatives without offering any actual information: “We also plan to return to the business of offering customers digital content inclusive of eBooks, newspapers and magazines…. We understand investors are anxious to hear more specifics about our plans in this arena and we do have a wide range of initiatives in development but due to the highly strategic nature of this fast evolving market, we will announce each of them as they launch…. I think our customers are very eager for us to enter the marketplace.”

The company is solid financially, noting that they started the fiscal year with $325 million in cash. To clarify our earlier note about the company’s expectation of opening just 15 new stores in the year ahead, 11 of those are relocations of existing (and 10 stores will be closed) so the net gain will provide almost no growth.

So I’d encourage everyone not to forget about your local bookstores and support them whenever possible. Make sure you are friends with the Community Relations Managers and do what you can to drive traffic back into the stores.