Barnes & Noble chairman wants to buy retail business
NEW YORK — The last remaining national bookstore chain is being taken off the shelf and dusted off for sale.
Barnes & Noble’s founder Leonard Riggio disclosed in a regulatory filing Monday that he wants to acquire the company’s stores and websit, but not the business that makes the Nook e-reader or the company’s college bookstores. No price was disclosed.
“When you’ve got control outside the public eye or public market, you can invest and translate your strategy at your own pace,” said Peter Wahlstrom, analyst at Morningstar. “It’s him believing he can run it better by himself without the distraction of the digital side. He believes the brand has value that’s not being recognized by investors.”
Barnes & Noble has 10 retail stores in South Carolina and three in the Charleston region. It’s been struggling to find its place as more readers have shifted to electronic books and competition has grown from discount stores and online competitors. The company, which has 689 bookstores in 50 states and 674 college bookstores, has been trying to avoid the fate of its former rival Borders Group, which did not adapt to the growing threat of the Internet and e-books and went out of business in 2011.
Technically, Riggio, who is chairman of the chain, didn’t found the original Barnes & Noble store in New York when it opened in 1917. But he bought the store and brand name in the 1970s. Under his leadership, Barnes & Noble became a one of the pioneers of the “big box” format in which national chains would set up large stores that offer a wide selection of merchandise under one roof.
The company also pioneered bookselling in general. In 1975 it began offering 40 percent off New York Times best sellers, which was then unheard of in the bookselling business.
Throughout the 1980s, the company expanded through acquisitions. Then it went public in 1993 and established its Web site in 1997.
But the company was hurt by Internet retailers like Amazon.com and discounters such as Wal-Mart and Costco expanding their book selections. Barnes & Noble has been proactive, investing heavily in its Nook e-book readers and a digital library. It struck a deal with Microsoft last April to create a Nook subsidiary. But the Nook faces competition from other devices like Apple’s iPad Mini, Amazon’s Kindle and Google’s Nexus tablet.
And the unit is far from profitable. Earlier this month, the company said it expects Nook media revenue of less than $3 billion in fiscal 2013. It also anticipates a loss for the unit before interest, taxes, depreciation and amortization to exceed the $262 million loss recorded in its 2012 fiscal year.
This follows a report from the retailer in January that its Nook unit revenue fell 12.6 percent to $311 million during the critical holiday period. Overall sales during the holiday period fell 10.9 percent at bookstores and online compared with a year ago. Barnes & Noble is scheduled to report third-quarter results Thursday.
Barnes & Noble bookstores, though, have been profitable even though they’re facing falling sales. The company has broadened its offerings in stores and sells more high-margin games, educational toys and other non-book items to improve results.
Monday’s filing with the Securities and Exchange Commission said that Riggio, who is Barnes & Noble’s largest shareholder with nearly 30 percent of the company’s shares, will seek to negotiate a price and pay for the deal with cash and debt.