Barnes & Noble: Nook’s Sales Success Over the Holidays a Hint of What’s to Come

Overall Barnes & Noble (NYSE:BKS) Nook sales increased 70% over the holiday season in 2011 from the previous year. This includes sales for Nook Simple Touch, Nook Color and the new Nook Tablet. Nook Tablet sales surpassed expectations, while Nook Simple Touch sales were lower than expected.

Digital content sales also increased 113% over the holidays. Based on forecasted device sales, by fiscal 2012 year-end, Nook expects annualized U.S. digital content sales will achieve a run-rate of approximately $700-$750 million.

In order to benefit from the quick development of the Nook digital business and its encouraging leadership position in the growing market for digital content, they have decided to pursue investigative work to separate the Nook business from Barnes & Noble (NYSE:BKS).

“We see substantial value in what we’ve built with our Nook business in only two years, and we believe it’s the right time to investigate our options to unlock that value,” said William Lynch, Barnes and Noble CEO.  “In Nook, we’ve established one of the world’s best retail platforms for the sale of digital copyright content. We have a large and growing installed base of millions of satisfied customers buying digital content from us, and we have a Nook business that’s growing rapidly year-over-year and should be approximately $1.5 billion in comparable sales this fiscal year. Between continued projected growth in the U.S., and the opportunity for Nook internationally in the next 12 months, we expect the business to continue to scale rapidly for the foreseeable future.”

The company also said that it is in talks with strategic partners such as publishers, retailers and technology companies in worldwide markets that may lead to extension of the Nook business overseas.

Here’s how Barnes & Noble’s stocks and a few of the its retail competitors are reacting to the news in market action:

Barnes & Noble, Inc. (NYSE:BKS): BKS shares recently traded at $10.61, down $2.94, or 21.7%. They have traded in a 52-week range of $10.30 to $18.73. Volume today was 6,694,294 shares versus a 3-month average volume of 1,356,150 shares. The company’s trailing earnings are $-1.14 per share.

Amazon.com Inc. (NASDAQ:AMZN): AMZN shares recently traded at $176.22, down $1.29, or 0.73%. They have traded in a 52-week range of $160.59 to $246.71. Volume today was 1,006,690 shares versus a 3-month average volume of 6,593,480 shares. The company’s trailing P/E is 92.89, while trailing earnings are $1.90 per share.

eBay Inc. (NASDAQ:EBAY): EBAY shares recently traded at $30.29, up $0.13, or 0.43%. They have traded in a 52-week range of $26.86 to $35.35. Volume today was 3,125,948 shares versus a 3-month average volume of 11,142,100 shares. The company’s trailing P/E is 22.09, while trailing earnings are $1.37 per share.

Apple Inc. (NASDAQ:AAPL): AAPL shares recently traded at $414.85, up $1.41, or 0.34%. They have traded in a 52-week range of $310.50 to $426.70. Volume today was 2,913,526 shares versus a 3-month average volume of 15,347,000 shares. The company’s trailing P/E is 14.99, while trailing earnings are $27.68 per share.

Wal-Mart Stores Inc. (NYSE:WMT): WMT shares recently traded at $59.04, down $0.67, or 1.12%. They have traded in a 52-week range of $48.31 to $61.06. Volume today was 4,335,510 shares versus a 3-month average volume of 10,676,300 shares. The company’s trailing P/E is 12.50, while trailing earnings are $4.72 per share.

Target Corp. (NYSE:TGT): TGT shares recently traded at $48.15, down $1.85, or 3.7%. They have traded in a 52-week range of $45.28 to $56.44. Volume today was 7,779,041 shares versus a 3-month average volume of 5,936,550 shares. The company’s trailing P/E is 11.21, while trailing earnings are $4.30 per share.

To contact the reporter on this story: Lindsey Grossman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com