eBooks viz. Barnes & Noble's Guidance for Fiscal 2011

Jim Milliot's excellent PW discussion of last week's B&N 2010 year-end analysis/2011 guidance clearly depicts book publishing's current state of transition. Digital expands. Brick and mortar retreats. And Agnosticism calls us all. Italics mine.

While Barnes & Noble chairman Len Riggio said at last week's investors conference that physical books will constitute the majority of its sales for at least the next five years, the company is investing heavily to make the transition from a bookseller to an electronic and technology retailer. CFO Joe Lombardi noted that B&N will invest $140 million in the current fiscal year to upgrade its digital capabilities, and B&N's long-range forecast calls for the retail share of total unit sales to fall from 90% in 2010 to 69% in fiscal 2014. The decline in retail will be offset by gains at Barnes & Noble.com driven by the sale of e-books and e-readers and accessories.

Lombardi explained that B&N was confident B&N.com could hit that target in part because of the record fourth quarter of the division; sales in the period ended May 1 rose 51%, leading to a 24% increase in fiscal 2010, to $572 million. Lombardi said the sale of the Nook as well as of e-books drove the gains, particularly in the last period, when the Nook became fully available after being out-of-stock before Christmas. ...

B&N will close no more than six to 10 stores annually over the next three years as leases expire, said Mitch Klipper, CEO of the retail group, adding that with the weak commercial market B&N is renewing leases at rates that are reduced by 10% to 20%. The company, however, has no plans to develop small-format stores to replace the Dalton outlets it closed in malls. ...

Riggio and other executives, including CEO William Lynch, also stressed that B&N already has a larger share of the e-book market (20%) than it does of the bricks-and-mortar store market (17%). Lynch said given the investment necessary to sell a large number of e-books, he believes the e-book market will be dominated by only three or four players. B&N's advantage will be its stores and its commitment, despite the Nook, to remain "device agnostic" in selling e-books to all types of devices. ...

The optimism of B&N executives is tied in part to the belief that digital books will grow the entire market for consumer books. Riggio likened e-books to the debut of mass market paperbacks, which transformed the industry by making books more widely available than they had been and at cheaper prices. E-books will grow to a $6 billion business by 2013, B&N predicts, driving consumer book sales to $27 billion, and their growth will offset the projected $2 billion decline in the sale of print books.