1/28/2013 4:42 PM ET|
Barnes & Noble to close hundreds of stores
The bookseller has historically closed 15 locations a year, and will continue that rate even as it tests new prototype stores.
Mitchell Klipper, chief executive of Barnes & Noble's retail group, told The Wall Street Journal that the New York chain will have 450 to 500 stores in 10 years, down from its current 689 locations. The company also owns a chain of 674 college bookstores.
The only thing surprising about this announcement was that it took Barnes & Noble this long to make it. It's hard to remember at time when Barnes & Noble wasn't struggling, and this past holiday season was no different.
During the time retailers earn most of their profit, Barnes & Noble reported an 8.2% decline in comparable store sales, a key retail metric measuring the performance of locations opened for at least a year. Sales of the company's Nook e-reader, a key part of its digital business, fell short of expectations.
Wall Street hasn't thrown in the towel on Barnes & Noble. The average 52-week price target on the stock is $17.75, about 37% higher than where it traded Monday. Microsoft (MSFT) last year agreed to invest hundreds of millions of dollars in Barnes & Noble's digital business. Its road ahead, however, is not easy. (Microsoft owns and publishes moneyNOW, an MSN Money site.)
According to the Journal, Barnes & Noble expects to shutter about 20 locations a year. Until about 2009, it was opening 30 or more a year. Monday, a spokeswoman told MSN Money that Barnes & Noble has historically closed about 15 stores per year. Some of those were unprofitable while others were relocations. The company opened two prototype stores last year and will continue testing store formats this year, she added.
The new stores likely attempt to address the sea change that the book business has undergone in recent years. Amazon announced in 2011 that sales of electronic books surpassed printed editions for the first time. There's no way the book business will go back to the way things used to be.
While e-books are cheaper and more environmentally friendly because they don't sacrifice trees, shopping for them just isn't as fun as traditional books. When my 6-year-old son gets older, he probably won't believe me when I tell him of the times I spent leisurely strolling through stack after stack of freshly printed books at my local Barnes & Noble. He may laugh when I tell him that the chain sold a wide selection of caffeinated beverages to encourage people to hang out.
Things change -- but not always for the better.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr
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