Aug 21 - ''Fifty Shades of Grey'' saved the quarter for Barnes and Noble, but like Best Buy, the retailer faces an online digital revolution and must find ways to redefine its place in retail. Carmen Roberts reports.
The erotic best selling trilogy, "Fifty Shades of Grey" that lifted some eyebrows, also raised Barnes and Noble's digital sales. The largest U.S. bookstore chain scored as ravenous readers bought digital versions of the series about a sadomasochist affair. Overall Barnes and Noble reported a loss, but its digital sales through the Nook e-reader jumped a whopping 46%. It's no surprise "Fifty Shades of Grey" gave the retailer such a boost, according to Michael Norris at Simba Information. SOUNDBITE: MICHAEL NORRIS, SENIOR ANALYST, SIMBA INFORMATION "Everything that I've heard from retailers around the country have just said it's been a blowout for them." Barnes and Noble is trying to adapt to an increasingly digital world. It's poured hundreds of millions of dollars into developing the Nook. But the e-reader only controls 27 percent of the US e-book market -- compared to Amazon's 60 percent with its Kindle. And sales of the Nook have been falling. Morningstar analyst, Peter Wahlstrom says Barnes and Noble deserves more credit for its regular book sales. SOUNDBITE: PETER WAHLSTROM, SENIOR ANALYST, MORNINGSTAR "Barnes and Noble has 20-year leases in many cases. Their stores are currently profitable and they're not really reliant upon the best seller that's coming out next month." Results were disappointing from another retailer. Best Buy says earnings fell to 20 cents a share - far less than the 31 cents analysts expected. Critics say the chain has become a showroom for customers who look at products then buy them online for less. The same thing happens at Barnes and Noble, but Norris says the retailer can turn that around. SOUNDBITE: MICHAEL NORRIS, SENIOR ANALYST, SIMBA INFORMATION "Barnes and Noble has a great opportunity to really sort of market themselves as, 'look we don't know what the future of books is going to be, but you can trust us to bring it to you whether its in digital or print form.' " The future for Barnes and Noble and Best Buy will likely be fewer stores with a stronger online presence. It's a blueprint still under construction. Carmen Roberts, Reuters.