logo  
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

Barnes & Noble Heads Back to the Drawing Board After NOOK Split

By  +Follow June 26, 2014 6:48AM
Share:
Tickers Mentioned:

Barnes & Noble stock, BKS, small-cap, small-cap companies, small-cap stocks, small-cap stars, NOOKBarnes & Noble, Inc.'s (BKS)  reported narrower losses for Q4 on Wednesday, but it was the book retailer’s decision to split its NOOK Media business from the Barnes & Noble Retail division into two separate companies. Shares of Barnes & Noble closed 5% higher on the day at $21.65, but popped as high as 10 percent at one point on the news. 

Barnes & Noble Finally Spins Off NOOK

Analysts believe it's the right time to spin off the NOOK department. According to the report, NOOK tablet sales decreased more than 22% to $87 million in Q4. NOOK's device and accessories sales also plunged 30% to $25 million in the quarter. E-book content revenue was $62 million in Q4, which was a 19% decline from the year-ago period. 

Released in 2009 following Amazon's (AMZN) Kindle 2 and Sony's (SNE) Sony Reader Touch, Barnes & Noble’s NOOK failed to gain traction and grow market share during its five years. The NOOK faced very stiff competition as the Kindle and Apple’s (AAPL) iPad dominated the market. 

Talks of possibly spinning off the NOOK business were shelved in 2013 as the company was willing to endure losses as a long-term strategy to gain market adoption. That is, until April 4 when Liberty Media slashed its stake due to disappointing sales of the NOOK.

The company said they hope to optimize shareholder value by this separation. However, Michael P. Huseby, CEO of Barnes & Noble, explained that the two separate entities will still pursue the same strategic opportunities as before. 

"We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation," Huseby said.

Huseby claimed that customers would not see any difference in their digital or store experiences. "It's a structural separation but it won't change the commercial ability of both companies to benefit from each other," he said.

The split is expected to be completed by the end of the first quarter of 2015. 

Barnes & Noble’s Improving Retail Business

In comparison, Barnes & Noble's prospects as a retail business looks a bit brighter without the anchor of the NOOK business.

For Q4, the company posted a net loss of $36.70 million, or $0.72 per share, as compared to a net loss of $114.80 million, or $2.04 per share, in the same period of last year. Sales for the quarter increased 3.5% to $1.32 billion from $1.28 billion a year ago.

Retail sales, including physical bookstores and online, edged up 0.8% to $956 million for the quarter, but fell 6% for the year to $4.3 billion. Same store sales also declined 4.1 percent for Q4 and 5.8% for the full year.

Barnes & Noble College sales continued to grow 18.2% to 298 million. Comparable store sales increased 2.6%. College sales were positively impacted by the back-to-school season’s increasing need for textbook.

For the 2015 fiscal year, the company expects retail and comparable bookstore sales as well as college comparable store sales to decline in the low-single digits.

What’s Next for Barnes & Noble?

With a $1.23 billion market capitalization, Barnes & Noble remains the biggest retail bookseller in the U.S., operating 663 stores in 50 states, occupying two-thirds of the country's retail bookstores. It college bookstore subsidiary also operates 696 college bookstores, serving more than 4.6 million students and faculty members across the country.

But while Barnes & Noble once saw the NOOK as the savior to its declining brick-and-mortar business, the move to finally ditch the money-losing segment for good is a painful admission for management. The hope now is that the company’s losses will continue to decrease as a result of addition by subtraction.

However, as Huseby stated, Barnes & Noble’s spinoff of the NOOK business does not mean the retailer is exiting the profitable digital book market. Ditching the NOOK would eliminate the high costs of research, design and manufacturing of the e-book reader device from Barnes & Noble’s balance sheet.

In addition, Barnes & Noble may also benefit from a more device-agnostic sales strategy for digital books.

On the brick-and-mortar front, the company will continue to expand its cash cow: college bookstores. Started as a university bookstore in New York, the division now operates 696 college bookstores across the country. The college bookstore segment currently accounts for about one quarter of the company’s total revenue.

In an interview with Reuters last month,the company’s head of college business Max Roberts said the company would increase the number to 1,000 stores over the next five years.

He added that the company would introduce more products and services in its college stores to help boost top line growth, which raises the question of whether the company will diversify the offerings of its other stores as well.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


Signup for our daily newsletter and get our best articles emailed right to you!

Results for amzn
AMZN Quote and News
19 Dec 14 08:32:13
$AMZN stock quote, 11:17am: 300.06 +2.33 (+0.78%).
May Vanburen
19 Dec 14 08:26:04
Shoud you sell or hold stocks like $LVS $JCI $GME $AMZN #equity http://t.co/9c41n1W8Wz
IH News Desk
19 Dec 14 08:22:41
$TVIX Company Info Updated Friday, December 19, 2014 11:11:52 AM $BHI $XLK $TWTR $AMZN http://t.co/i0F0MjMCYb
Perfor Mance
19 Dec 14 08:20:11
Option Millionaires: jimmybob: $AMZN over 300 http://t.co/VK3b3NmR8p
Genia Crist
19 Dec 14 08:18:15
Regretting your investment in $CR $PNR $CME $AMZN #newsletter http://t.co/ysEfHOyLEP
invest correctly
19 Dec 14 08:17:45
Amazon New Content For FreeTime Unlimited $AMZN http://t.co/gbqr4bemH0
Mandeep
19 Dec 14 08:15:14
$AMZN took #daytrade profit at $301. See chart for entry and exit http://t.co/ecK4qBFAP7
Alistair Zhang
19 Dec 14 08:14:46
Are you considering selling $TSLA $PII $EXC $AMZN Must have http://t.co/MVMzO8CACg
Investing News
19 Dec 14 08:14:03
$AMZN unveils plan to put United Postal Service out of business. http://t.co/8eGzc1ex5c
Kobeissi™
19 Dec 14 08:13:59
Looks like #Amazon has started to allow Prime Members to order their new device #Echo. $AMZN
Nook Smart
19 Dec 14 08:12:33
Honestly, when I evaluate $AMZN, the product credibility problem is worse than the lack of profit. It's just such an obvious retail killer
Necole Diaz
19 Dec 14 08:11:03
#Stocks you migh want to Sell $HUM $SLAB $WDAY $AMZN Check out http://t.co/o9D7zBf7kZ
Savanna Teel
19 Dec 14 08:10:26
#Stock Market Reports you need on $RNR $OC $WPX $AMZN #investing http://t.co/ifSbfbVK2Q
Rotten Al
19 Dec 14 08:09:17
Impressive that Ponzi is up on high volume. Some bulls never learn. Patience has worked for me so far $AMZN
Langan Stocks
19 Dec 14 08:09:09
$AMZN Financials Updated Friday, December 19, 2014 11:03:35 AM $XLF $IRM $UCO $DRYS http://t.co/1LhzXzFVpz
Lael Nation
19 Dec 14 08:06:48
Awesome #Stock #Research on $ABT $OV $JKHY $AMZN Give it a try http://t.co/BOyrKyKmkw
Rosner Stocks
19 Dec 14 08:06:15
$AMZN Opinions Updated Friday, December 19, 2014 10:59:26 AM $SWKS $CELG $MA $QCOM http://t.co/LK7Z5oWFVt
Jamtrades
19 Dec 14 08:04:13
$AMZN McMillan news having an effect on this stock here.
HOVA
19 Dec 14 08:04:03
Might not be able to buy $AMZN under $300 to much longer
ARK Web x.0
19 Dec 14 08:03:01
$AMZN needs to master #mobile, to enjoy the trend of mobile commerce growing 3X faster than #ecommerce. http://t.co/CTYvskhX2m
Jostrader
19 Dec 14 08:01:24
$AMZN another dynamite BOOOOOOMMMMMM> LOL
TradeTexasBig
19 Dec 14 08:01:07
$AMZN hit 300 .. and i didnt understand why it was beaten down in the first place..
Dathan Pyle
19 Dec 14 08:00:11
StockViews Rating Change for $AMZN: Initiating at... http://t.co/SV4eSPAYaY
StockNewsWires
19 Dec 14 08:00:05
$AMZN: Analysts Stand Behind Amazon As It Continues To Flounder (AMZN) http://t.co/q6R1Slo7Hh http://t.co/9OeSN4ECwd
Quantheta
19 Dec 14 07:59:53
#TOPTICKERTWEETS $SPY $BBRY $QQQ $IWM $AAPL $DIA $AMZN $SPX $FB $NQ #quantheta #sentiquant 20141219 11:00:26:908
Eternity101
19 Dec 14 07:59:49
shoot.. i forgot i changed my $AMZN from 3.10 to 1.90 this morning -- my 300 wkly calls. oh well. bought them yesterday @ 1.10
Etos Etana
19 Dec 14 07:59:48
RT @iHangout: leahanne: The Launch Pad: $AMZN http://t.co/9QBaSEUkeQ Inc (AMZN) 297.87 +0.14 (+0.05%) http://t.co/rH3WQEeGT5
MajorLeagueTrading
19 Dec 14 07:59:30
$AMZN covering part of the 300 Iron Condor we sold yesterday for 1.68 here.http://t.co/hkjwkvupbW
Becky Hiu
19 Dec 14 07:59:29
$AMZN gunning it. woot... 301
Ian Nelson
19 Dec 14 07:59:17
There goes $AMZN...congrats to the weekly call players who made bets this morning for a lotto
Sourabh Banerjee
19 Dec 14 07:59:13
RT @ForbesTech: Investors have long been willing to pay a premium for Amazon stock despite weak margins: http://t.co/6hhQYgBnKg $AMZN
Amigobulls
19 Dec 14 07:57:36
All you need to know about the Aibnb, Box and DropBox IPOs $GOOG $MSFT $TRIP $EXPE $AMZN #Airbnb #BoxIPO #DropBox http://t.co/2M0eWAntaQ
carolyn
19 Dec 14 07:56:22
@CallaLilly101 I have done my fair share of keeping the $AMZN stock up this season 😄
Etos Etana
19 Dec 14 07:55:37
RT @IHPosts: leahanne: $AMZN http://t.co/ZZaTJMzqwX Inc (AMZN) 297.87 +0.14 (+0.05%) http://t.co/f1VHw6XuJo
Becky Hiu
19 Dec 14 07:55:29
@ibex *high five* re: $AMZN --- actually looks good for higher now but profit is profit. :D
jon
19 Dec 14 07:54:27
Bought $AMZN this morning! Still looks strong! Free webinar coming out next week
Becky Hiu
19 Dec 14 07:54:27
$AMZN very nice all timeframes. 300 should be awesome support for (now)
Lanelle Fultz
19 Dec 14 07:54:18
Regretting your investment in $CREE $TTC $MCD $AMZN #wallstreet http://t.co/gdrfV60v4Z
Becky Hiu
19 Dec 14 07:53:44
Out rest weeklies 1.2 from 70. Happy and done for day. $AMZN
Kristin
19 Dec 14 07:53:37
Commented on StockTwits: $AMZN wee dingding ITM http://t.co/CPow8KMEtC
leahanne
19 Dec 14 07:53:01
$XIU.TO Ishares Sp TSX 60 Index (XIU.TO) 21.30 +0.09 (+0.42%) $C $AMZN $FXI http://t.co/dbD9anpL31
Eternity101
19 Dec 14 07:52:15
$AMZN -- fasten your seat belts RESISTANCE: 306.25 310.64 315.06 319.51 324.00 https://t.co/I3XMgQw0yv
Dangelo Cadwell
19 Dec 14 07:51:21
Small-cap stocks breaking 52-wk high prices $WRI $KMI $VTR $AMZN #liquidity http://t.co/5qolMUYm0N
Investors Hangout
19 Dec 14 07:51:18
leahanne: $AMZN http://t.co/ZZaTJMzqwX Inc (AMZN) 297.87 +0.14 (+0.05%) http://t.co/f1VHw6XuJo
Investors Hangout
19 Dec 14 07:51:12
leahanne: $AMZN http://t.co/I7gOOlR1te Inc (AMZN) 297.87 +0.14 (+0.05%) http://t.co/DFoy6IdgF1
Two Knights Trading
19 Dec 14 07:50:06
As $AMZN gets crushed we are all, shorts included, utilizing Amazon for copious amount of holiday shopping.Does that tell you something?
R Fraser
19 Dec 14 07:50:04
.@nachoswithsalsa short puts and a few calls in $AAPL $AMZN $XLE $XOP $WHR $FDX $SPX $SPY all expiring today
Quantpost Service
19 Dec 14 07:49:20
$AMZN News: "Analysts Stand Behind Amazon As It Continues To Flounder $AMZN …" http://t.co/IWlUURBGOc Board view: https://t.co/dDf5fDn7Ez
Seeking Alpha
19 Dec 14 07:49:19
Analysts Stand Behind Amazon As It Continues To Flounder http://t.co/qFmUOU39lv $AMZN
CallaLilly101
19 Dec 14 07:49:11
it’s so cute that $AMZN can’t get up yet safely assuming all on %TWTR have nice packages coming because otherwise .. real world shopping
				
				
By  +Follow June 26, 2014 6:48AM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.