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Barnes & Noble reports much lower holiday sales

January 4, 2013

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Ahead of its February 19 fiscal second quarter earnings call, Barnes & Noble is already reporting a very disappointing nine-week Holiday period, and the news aren't good.

B&N said today that its retail segment, which consists of the Barnes & Noble bookstores and internet businesses, had revenues of just $1.2 billion, decreasing 10.9 percent over the 2011 comparable sales period.

Barnes & Noble attributed the drop to an 8.2 percent decline in comparable same store sales, a few store closures and lower overall online sales.

Core comparable store sales, which exclude sales of Nook products, also decreased 3.1 percent as compared to the prior year due to lower bookstore traffic.

Unlike rival Amazon, which saw record sales of its Kindle eReaders and tablets, B&N said sales of its Nook products in the retail segment declined during the holiday period due to lower unit volume and decreased average selling prices.

The Nook segment, which consists of the company’s digital business (including eReaders, digital content and accessories), had revenues of $311 million for the nine-week holiday period, decreasing 12.6 percent as compared to a year ago.

Digital content sales increased 13.1 percent, while Nook device unit sales declined during the holiday period as compared to the prior year.

Digital content sales are defined to include digital books, digital newsstand, and the apps business. "Nook device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of the holidays," said William Lynch, CEO of Barnes & Noble.

"We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward," he added.

As a result of the Nook sales shortfall, the company now expects fiscal year 2013 Nook Media revenues of approximately $3 billion, and Nook segment EBITDA losses at a comparable level to fiscal year 2012.

In contrast to Barnes & Noble, Amazon said its line of Kindle eReaders and tablets once again broke Black Friday and Cyber Monday sales records for the company, something that some analysts were already expecting.

In other eCommerce and retail news

The latest monthly report by the SSL Labs project reveals that many eCommerce sites still remain vulnerable to the Beast Malware attack, more than a year after the underlying security vulnerability was clearly demonstrated by security researchers all over the globe.

The 'Beast Malware' is short for Browser Exploit Against SSL/TLS. The stealthy piece of JavaScript code actually works with a network sniffer to decrypt the encrypted cookies that a targeted website uses to grant access to restricted user accounts.

October numbers from SSL Pulse survey of 179,000 popular websites secured with the ubiquitous secure sockets layer (SSL) protocol demonstrates that 71 percent or more than 127,000 websites are still vulnerable to the BEAST attack.

And the latest numbers show little change from September figures, down just one percentage point from the 71.6 percent vulnerable to the BEAST attack recorded in August.

Exposure to the so-called CRIME attack was also rampant, 41 percent of the sample support SSL Compression, a key prerequisite of the attack in the first place.

The so-called Crime technique lures a vulnerable web browser into leaking an authentication cookie created when a user starts a secure session with a website. Once the cookie has been obtained, it can be used by hackers to log in to the victim's account on the site.

The root cause of the BEAST attack, first outlined by security researchers in September 2011, is a vulnerable ciphersuite on servers. The dynamics of the CRIME attack are more complex but capable of being thwarted at the browser or completely neutralized on a properly undated and configured server.

The SSL Pulse survey also looks at factors such the completeness of SSL certificate chains and cipher strengths, among other factors.

Of the 179,000 sites surveyed, only 24,400 or 13.6 percent deserve the designation as "secure sites", according to SSL Labs.

In other eCommerce news

In a bold and unexpected initiative that could open up a new path in the ongoing bricks-and-mortar versus eCommerce war, a consortium of fifteen major retailers have joined forces to develop a new mobile payment system to directly compete against Google Wallet.

The group, which includes such American giants as 7-Eleven, Best Buy, CVS, Lowe's, Shell, Target and Walmart, has formed a new company called Merchant Customer Exchange (MCX), which will offer a mobile-commerce solution under the same name.

"Combined, these participating member merchants already serve nearly every smartphone-enabled American on a daily basis, offering MCX the merchants the ability to offer a mobile-commerce solution that truly works for consumers," the group's website says.

In a press release issued on August 15, the group said that the combined annual sales of its founding members totaled around $1 trillion. Obviously, the MCX members would like to hang onto as much of that market as possible as the industry for mobile payments rapidly grows.

Source: Barnes & Noble.

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