For B&N e-books outsell physical books three to one

Barnes & Noble's digital business grows, while physical store sales fall

Barnes & Noble on Tuesday said it sold three times as many digital books through its website compared to physical books during the fourth fiscal quarter.

The growth in e-book sales comes as the company reported a rise in digital sales through its website and a decline in sales through its physical bookstores during the fourth quarter. In February, B&N said it was selling two times more e-books than physical books. Physical books still generate more sales volume, however.

B&N sells e-books through its Nook e-reader and through its Nook application for third-party devices such as smartphones and tablets. The company is adding millions of Nook users each quarter, said CEO William Lynch during an earnings conference call.

The company's overall Nook business across devices, accessories and digital content through the physical stores and website grew to over US$250 million, increasing 300 percent compared to the fourth quarter last year, Lynch said. The Nook sales number includes e-book content sold through BN.com. Store sales were $943 million for the quarter, declining by 2.9 percent.

The increasing e-book business did not save the company from a loss, however. For the fourth quarter, the company reported a consolidated net loss of $59 million on total sales of $1.37 billion, compared to a loss of $33 million on sales of $1.32 billion a year earlier.

The company is continuing to invest in the burgeoning digital business, Lynch said. The company expects e-book prices to fall as self-publishing applications gain a foothold, Lynch said. B&N offers Pub!It, which allows independent publishers and authors to upload and distribute works through BN.com and the Barnes & Noble eBookstore.

The company is not actively looking at bundling physical books with e-book content at discounted rates as part of book sales, Lynch said. The bundling business could have legs for popular books that users may want to own in physical form, but not in the short term.

"What we've not yet seen ... is large consumer demand for both the physical and the e-product," Lynch said.

Barnes & Noble last year said it was looking for a possible sale of the company amid losses and troubles related to maintaining physical stores. Last month media conglomerate Liberty Media offered to buy the company, a proposal that will be reviewed by B&N's board, Lynch said.

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