While Barnes & Noble's stock fell 61% over the last year, analysts expect positive sales growth during the holiday season to significantly boost the outlook for the retailer.
One damper on Barnes & Noble's recently improving sales numbers is the caveat that the figure excludes sales of its Nook reader, whose unit ended the year with a $39 million loss.
CEO Ronald Boire called the loss "clearly unacceptable,” saying the unit is "looking for material improvement in the Nook operating costs going forward."
Barnes & Noble is expected to report another bump in same-store sales Thursday and is denying reports that it will be closing 197 stores by 2022. But it's the limited success of its Nook that is like an albatross around its neck— important to its customers but deadly to its bottom line.
The bookseller feels stuck with the Nook because the few fans it has are ardent ones, and major book readers (and e-book buyers).
"You cannot just walk away from them," Gabelli & Co. analyst John Tinker, whose firm owns Barnes & Noble stock, told CBS Moneywatch. "We have a very, very complicated situation.”
As is often the case, Amazon looms large over Barnes & Noble’s fortunes in this area, with its Kindle e-reader the default device for many in the space. That ensures that Amazon will able to also sell more e-books.
Meanwhile, the New York City-based bookseller could continue to improve its sales picture—excluding sales of its Nook reader—by focusing on opening a greater number of smaller and more urban stores.
"Their biggest problem obviously is that their stores are very big," Tinker told CBS Moneywatch. "Their average size is about 26,000 square feet. So, how do you have a store that offers tremendous choices of books yet isn't too large?"