Barnes and Noble has decided that international expansion is not apart of their plans going forward. The company has closed their Luxembourg offices and instead will focus exclusively on their two core markets, the United Kingdom and United States.
Luxembourg houses the European head offices of many of the largest digital book sellers. The country has one of the lowest VAT rates in Europe and provided companies like Amazon the ability to sell e-books at a 2% VAT, helping them reach critical mass. In early 2015 the European Union changed the way VAT is calculated from where the company was located to where the purchaser lives.
In early 2012 Barnes and Noble joined Amazon and Kobo by opening up a Luxembourg office to not only offer e-books at a lower VAT rate, but to serve as a launch pad for future European expansion. This was around the same time period as Microsoft invested a few hundred million dollars to have Barnes and Noble construct a Windows 8 Reading App to make it available in 30 different countries.
Barnes and Nobles plans to launch the Nook and sell e-books in other markets was stymied when they bought back Microsoft’s shares in the Nook division last year and closed their Luxembourg offices a few weeks ago. It really looks like the current executive team sees no value with launching e-readers, tablets and an online bookstore properly in Europe.
Last quarter Barnes and Noble saw revenue in the Nook division fall to $45 million dollars and it looks like sales are on pace for $190 million in 2015. This is a far cry from the US$920 million they generated in all of 2011.
Barnes and Nobles primarily competition; Amazon, Apple, Kobo, Google have been expanding their digital ecosystems and selling hardware for the last five years all over the world. B&N on the other hand has been myriad in the UK and US, two of the worlds most saturated markets. It is no small wonder why their revenue continues to decrease.