Time to close the book on Barnes & Noble

The chain is now minus its CEO, and its future is a mystery that doesn't likely include a happy ending.

By Jonathan Berr Jul 10, 2013 10:08AM
Shares of Barnes & Noble (BKS) surged more than 5% Tuesday as Wall Street seemed to view the sudden resignation of CEO William Lynch as a sign that the future for the largest bookstore chain may be brighter than its recent past.

This optimism about the New York-based company, which is being stoked as Chairman and top shareholder Leonard Riggio leads a reorganization, however, may be short-lived.
Barnes & Noble has been a mess for years. The company's latest earnings report was especially dismal. Not only did it lose $118.6 million -- more than double what it lost a year earlier -- but sales of the Nook e-reader plunged a depressing 34%. Lynch had made the Nook a focal point of the company's growth strategy, so his departure -- effective immediately -- was hardly a shock.

CFO Michael Huseby will be president of the company and CEO of Nook Media. Barnes & Noble isn’t looking for a new CEO, and Huseby will report to Riggio.  

What will happen next is anybody's guess.

Customers browse books at a Barnes & Noble Inc. store in Emeryville, Calif. (© David Paul Morris/Bloomberg via Getty Images)Riggio has been trying for months to separate the Nook business from the physical bookstores. Though Nook has gotten some good reviews, it has failed to make any significant headway against market leader Amazon.com (AMZN). In the latest sign of the business' bleak future, Barnes & Noble recently announced plans to find manufacturing partners.

Microsoft (MSFT), the corporate company of Killer Companies, and Pearson (PSO) have taken minority positions in Barnes & Noble's e-book business. There have been rumors that the software giant, which has invested $300 million in Nook, was considering buying the whole business, but nothing has come of them.

Some analysts suggest that the spit will be accelerated now that Riggio has assumed tighter control of the company. That may be wishful thinking. Riggio, who acquired the first Barnes & Noble store in 1971, initially proposed buying the company's 675 Barnes & Noble bookstores and 686 college bookstores in February. Analysts expected the business to fetch $1 billion, but a deal has yet to materialize.

Barnes & Noble certainly has proven to be resilient. The chain has survived fierce competition from Amazon, which forced rival Border's out of business in 2011. Even under the best of scenarios, however, the company's future is at best uncertain.

Though the stock is trading about 4% under analysts' average 52-week price target of $19.50, investors have no reason to buy Barnes & Noble now. The shares offer too many risks for too little reward.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
53Comments
Jul 10, 2013 11:21AM
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So sad to see the bad news. Old school style brick and mortar book stores are getting harder to find. Shopping for and reading a book I guess is like any hobby.  You enjoy the totality of the experience. Must be like smokers describe enjoying a satisfying dinner followed by a smoke.
I like the stores. Clean, courteous clerks, good selection, and the coffee bar cafe tops it off.
I do see as a business man that it seems like a lot of high ceiling space to heat and cool. Notice kids (my daughter included) on their computers at desks but necessarily buying books for food. I always tell my daughter to at least buy a coffee and pastry to support the business.
Will be sad to see the internet drive them out of business. But I like Amazon too.
So much for the double sided curse of the internet. Get what you want at a cheap price, but no more nice stores to walk through loaded with products.

Jul 10, 2013 12:06PM
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I hate to think of more possible store closings...the digital age has taken over and changed things forevermore...not sure if it is all  good ;..there  is an intrinsic value to holding and reading from an actual BOOK!!
Jul 10, 2013 12:46PM
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When we have a World without Books, We will have a World full of Idiots....Re-TOG, 2012
Jul 10, 2013 1:50PM
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I worked for B&N for 10 years.  When I started working there, I would gravitate towards the genres I always did when I shopped there.  After some time, I saw what other people were reading and  expanded my focus.  There is nothing like a good book, the feel and even the smell of the paper and ink.  As nice and convenient as a Nook or Kindle can be, it's just a piece of plastic.  Books are like old friends.  You can travel to new places with them, go back in history or visit worlds that don't exist except in the written pages.  I would be a terrible day to see that store close.  I can't imagine what it would be like to only be able to browse the very limited offerings at a Target or Walmart.  I have tried browsing on line, and have found it to be cold and unsatisfying.  It's so easy to miss a lot of truly wonderful books from new authors.  You would have to wonder what would have happened to Harry Potter and Twilight if the larger stores like B&N hadn't promoted them like they did.
Jul 10, 2013 11:39AM
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I don't know why people don't purchase off of BN.com.  The prices on there are the same if not lower than Amazon.  Doesn't anyone comparison shop anymore?  The Nook is a much better reader than Kindle too, but people will buy a Kindle because of the name not because it's necessarily better. 

Jul 10, 2013 11:32AM
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Browsers and Grazers, don't pay the bills..

Sounds like they may have too many "laptop hobos" also.

Other businesses should certainly take heed.

Jul 10, 2013 1:47PM
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maybe people should treat booksellers as what they are, retail stores! They're not libraries. Every time I go in a Barnes and Noble every aisle is filled with young people just sitting there reading over a cup of coffee. Buy the dang book and take it home. 
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soon there will be no stores for people to work at everything will be done in China

 

sales will happen on Chinese internets and made in China and shipped on Chinese boats and delivered to your house from trucks driven by software run on Chinese computers.

 

Can you say goodbye to all jobs in the USA

 

Quess Wall Street will go up 50 percent on this news

Jul 10, 2013 1:51PM
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How sad. Soon there will no place to go get a cup of coffee on a cold day and enjoy shopping for a new book or browsing our favorite cd's and magazines. What has Amazon done for anyone except put our local brick and mortar stores out of business? Amazon does not provide local employment, contribute to the local tax base, or provide work for these stores supporting service industries. These are jobs that are essential for the fabric of our local communities and we keep losing more and more of them.

When our shopping centers are stuck with vacant book and cd stores and the jobs gone with them, we may wonder who really benefited from ecommerce stores like Amazon.  

 

Jul 10, 2013 2:06PM
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Browsing for books digitally is not as enjoyable as browsing through physical books. I can't tell you how many hours I've spent inside a B&N store. I hope they remain for years to come.
Jul 10, 2013 12:41PM
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Worldly Dude, yep that's a lot of the problem...These people are basically "moochers"...

Really nothing different then a "panhandler" on the streets...

Or some lazy basturd, that says they "will work for food." One of the newer scams..

 

Best way to treat them is the way you did, ask them what they have spent and how long they plan on sucking up the "free ambience".

Any chance that a Fat Guy was one of them, playing with a "mini car collection" layed out on the table with a cheap laptop posting "snide remarks" on MSN.

 

I do that in Vet's Clubs, when a guy has been sucking on a draft for an hour, they are the guys that never shut up and usually weren't War Vets...I finally tell them I will buy them another beer, if they will just stop the constant yapping...And I can mull over my Whiskey in some peace and quiet.

Jul 10, 2013 3:28PM
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That really is sad. As a bibliophile, I refuse to give in to items like Kindle and Nook. I prefer good, old-fashioned books that I can turn the pages on. The feel of the paper, the smell of the book - the whole experience is enjoyable. You just can't get that from an e-book. It's a shame that stores like B & N are all but extinct now.
Jul 10, 2013 11:52AM
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Another problem facing the niche stores were big box, such as Walmart,Target,etc..

Carrying new Books on sale prices within weeks, same as some Videos or Games.

 

The Publishers  got greedy and anxious and lost some of their outlets.

Jul 10, 2013 11:42AM
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B&N  along with Borders, was built on a concept of just that..."Build and they will come."

My wife thought it would be a good investment, I did not.

Little forward looking to the fact of ferocious internet competition.

 

And what always used to be dusty little new and used book stores, interest was waning.

Along with Library usage at a questionable levels in several locations.

Another sad chapter in pricing of pennies, leveling others to the dirt.

Jul 10, 2013 1:59PM
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it seems people would rather read on tablets so small you need a magnifying glass than real books any more.  soon there won't be any libraries left either.
Jul 10, 2013 2:11PM
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It just has to stay open!  Leave your house and go shop in the nearest Barnes and Noble!  I order online because that is were you find the Bargains.  They need to do discounts more often.  I love shopping in the stores.   I wish Crown Books was still around...they only sold discounted titles,it was great.      get out and shop in these stores and stop using the computer so much!   Digital age has put people out of work for sure.  What a shame.  They need to reinvent themselves a bit...add more items to the Menu in the Coffee cafe's!                   
Jul 10, 2013 4:06PM
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I gave up books and went electronic for one reason.  I love to read and for a while I saved every book I ever read.  then my father passed and cleaning up and going through his belongings made me realize how much STUFF i have and how I do not want to put anyone through this.  so I started with my biggest and heaviest stuff which includes pile of books.

so I contact my library..do you want them?...nope.

so i start looking on line for donation areas, no, no, no, well maybe if you can get us a list so we can choose....etc

so then I figured I had the foolproof plan...most of the eastern seaboard had Libraries that were lost during hurricane sandy.  So I started looking on how to send my books to them, only to find out they do not want them either.....

So I gave what I could away to people and threw the rest away and switched to all electronic.  I get them when I want, can read them anywhere, and have no storage or disposal...perfect.

oh and the books I couldn't get libraries to take?...contemporary authors like  James Patterson,  Jeffery Archer, WEB Griffen etc...
Jul 10, 2013 12:21PM
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I do miss going into a book store like I did not too long ago.  But I will admit that it is easier to download a book onto my Kindle and not have to worry about where I am going to put the book when I am done.  I would never throw a book away and I can't seem to part with the ones I have now.  But having the convenience of having a Kindle makes you loose the experience of holding a book and seeing the cover art everytime you pick it up.
Jul 10, 2013 1:11PM
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The "book" is closer to closing on the US economy than it is on BN JACK!!!!

Jul 10, 2013 2:30PM
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I adore Barnes & Noble, and what could and SHOULD be done would be to have any book, e-book, digital music and/or movie orders purchased from Amazon within the store, result in a payment of some sort to B&N.  Often I am in there buying a book when they have only PART of a series.  I will order the missing book from my smart phone while purchasing the remaining hard copies from within the store.  I would actually pay a minimal cover charge to go in to a good bookstore.

 

The Nook thing doesn't interest me in the slightest.  How hard would it be for them to make an arrangement to carry the reader that folks actually USE? 

 

Book stores cannot be allowed to die.  I will continue to support them as opposed to buying my books from Costco or Sam's Club.

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