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.


Liked What You Read? Join Equities.com as a contributor and get eyeballs on your content FOR FREE!

Results for amzn
norsepast
3 Mar 15 23:36:18
RT @googlefct: BREAKING: Amazon just bought @Twitch for $970 million in cash. $AMZN
Google Facts
3 Mar 15 23:35:16
BREAKING: Amazon just bought @Twitch for $970 million in cash. $AMZN
#SocialMedia NC
3 Mar 15 23:25:38
Samsung Galaxy S6, S6 Edge: New Amazon Sign Up Page Offers Discount Prior… http://t.co/HCNKT7Ju6l #Amazon • $AMZN http://t.co/LGUr5WCsxa
John L. Bair
3 Mar 15 23:18:16
RT @ACInvestorBlog: $BABA $AMZN Alibaba Is Expanding Its Cloud Services To The U.S. To Give Amazon New Competition http://t.co/kBZfSebKIb
Steelblues11
3 Mar 15 23:10:26
RT @DeidreZune: $BABA opens 1st US cloud center, enters hotly contested market http://t.co/xdjEhFHXOP Nothing better to do? Ma? $GOOGL $M…
James DiPlata
3 Mar 15 22:40:49
RT @ACInvestorBlog: $BABA $AMZN Alibaba Is Expanding Its Cloud Services To The U.S. To Give Amazon New Competition http://t.co/kBZfSebKIb
Antonio Costa
3 Mar 15 22:27:02
$BABA $AMZN Alibaba Is Expanding Its Cloud Services To The U.S. To Give Amazon New Competition http://t.co/kBZfSebKIb
Capital Market Labs
3 Mar 15 22:03:48
$AMZN Earnings and Inventory Management Trends #CML http://t.co/Ekh07b9QdK
IH News Desk
3 Mar 15 21:55:36
$GDXJ Stock Forum Updated Wednesday, March 4, 2015 00:11:27 AM $AMRN $AMZN $ZIOP $IJJP http://t.co/1R27pUFHFt
PolgarStocks
3 Mar 15 21:55:35
$AMZN Reviews Updated Wednesday, March 4, 2015 00:07:30 AM $CVS $RSX $MU $ZIOP http://t.co/Msqtg8M47T
Bradley
3 Mar 15 21:51:07
Great FREE #tutorial here for #traders http://t.co/LEJZ0NzJO6 $NFLX $BAC $AMZN $MSFT $AAPL $GOOG $GOOGL $FEYE http://t.co/ENv9G7Dvci
desnudo
3 Mar 15 21:47:29
RT @DeidreZune: $BABA opens 1st US cloud center, enters hotly contested market http://t.co/xdjEhFHXOP Nothing better to do? Ma? $GOOGL $M…
tolmasky ebooks
3 Mar 15 21:39:56
I think I figured out how $AMZN can finally become profitable.
James DiPlata
3 Mar 15 21:36:16
RT @librab103: So the #stocks I have on my watchlist for #OptionsTrading are: $GM $AAPL $AIG $C $BABA $AMZN $NFLX $TSLA $F $OIL $GPRO $CSCO
DeidreZune
3 Mar 15 21:33:20
$BABA opens 1st US cloud center, enters hotly contested market http://t.co/xdjEhFHXOP Nothing better to do? Ma? $GOOGL $MSFT $AMZN $IBM
Dr. Juan Cruz, Ed. D
3 Mar 15 21:13:05
This Retailer Is America's Most Respected Company http://t.co/fE0wlME2L6 via @daily_finance $AMZN $SNE $NLSN
John J Cordio
3 Mar 15 20:58:36
RT @themotleyfool: We've heard of speedy shipping, but this is bonkers. $AMZN's plan to 3-D print your stuff _as it's being delivered_: htt…
Langan Stocks
3 Mar 15 20:57:41
$XLU Opinions Updated Tuesday, March 3, 2015 11:03:19 PM $TNA $UCO $XBI $AMZN http://t.co/ZzL8GKepxq
PolgarStocks
3 Mar 15 20:55:13
$PGSY Short Sales Updated Tuesday, March 3, 2015 11:07:14 PM $TIP $SRPT $ABX $AMZN http://t.co/ucKnmQm09Q
Tad Doughty, CFS
3 Mar 15 20:39:52
have you cut the cable chord yet? I'm very tempted, but wife likes $DTV http://t.co/njzA9UnZ26 $CMCSA $NFLX $AMZN $TWC
Sir Matthew Battle
3 Mar 15 20:39:19
So the #stocks I have on my watchlist for #OptionsTrading are: $GM $AAPL $AIG $C $BABA $AMZN $NFLX $TSLA $F $OIL $GPRO $CSCO
David Hegedus
3 Mar 15 20:33:31
New Buys by Top Funds http://t.co/g6jBoU2eLd $AAPL $LNKD $RAX $AGN $BIIB $PCYC $SLXP $LOW $MNST $HBI $ULTA $HD $ORLY $AMZN $GOOGL $SPG
Owler
3 Mar 15 19:28:00
If $Amzn didn't invent #IaaS, then who did? http://t.co/PvLONPV9Mv
Alison
3 Mar 15 19:22:32
@librab103 $BABA $AMZN $NFLX $TSLA
Debbie Richards
3 Mar 15 19:13:09
This Retailer Is America's Most Respected Company http://t.co/SrBUa1KXOB via @daily_finance $AMZN $SNE $NLSN Congrats @wegmans
fazo
3 Mar 15 19:12:20
RT @hedgefundclone: I will short all the overvalued tech stocks at the same time $TWTR, $LNKD, $AMZN at same time
Jillian
3 Mar 15 19:10:49
RT @hedgefundclone: I will short all the overvalued tech stocks at the same time $TWTR, $LNKD, $AMZN at same time
Bradley
3 Mar 15 19:09:07
Helpful video for stock options beginners!! http://t.co/8g4lUZPHEF $GOOG $AAPL $GOOGL $AMZN $FB $FEYE $FXCM http://t.co/KQx7zxyt4P
Jersey Drew
3 Mar 15 19:06:09
RT @hedgefundclone: I will short all the overvalued tech stocks at the same time $TWTR, $LNKD, $AMZN at same time
BillionairesPort
3 Mar 15 19:04:05
I will short all the overvalued tech stocks at the same time $TWTR, $LNKD, $AMZN at same time
Amanda x SOLER
3 Mar 15 19:03:06
RT @ETFtrends: Street One Financial - ETF Chart of the Day: Nasdaq Highs http://t.co/x8IEwZC2qg #tech #ETFs $QQQ $AAPL $MSFT $AMZN $VGT $IY…
James Durham
3 Mar 15 18:51:30
This Retailer Is America's Most Respected Company http://t.co/3Ev1adTgCd via @daily_finance $AMZN $SNE $NLSN
StockNewsWires
3 Mar 15 18:36:03
$AMZN: Traders Buy http://t.co/AoijYEnYQx on Weakness (AMZN): http://t.co/IQTae53DA5
InterCooler
3 Mar 15 18:23:45
Traders Buy http://t.co/6Ia1axa3YQ on Weakness $AMZN http://t.co/FWLIwwaBH4
Dan
3 Mar 15 18:16:33
$AMZN high open interest range is 385.00 to 400.00 for option expiration 03/06/2015. http://t.co/1IaogKVyjN
Carolyn Dixon
3 Mar 15 18:14:40
This Retailer Is America's Most Respected Company http://t.co/nr6anuEbSk via @daily_finance $AMZN $SNE $NLSN #Wegmans #familyowned
Venky Ramesh
3 Mar 15 18:02:25
Amazon to start shipping to Cuba? $AMZN http://t.co/EAAnMmXZYc
Dan
3 Mar 15 18:00:49
$AMZN Max Pain = 380.00. Maturity = 03/06/2015. Previous close = 384.61. http://t.co/b7UIb6YBzo
Rosner Stocks
3 Mar 15 17:57:09
$HPQ Reviews Updated Tuesday, March 3, 2015 8:43:32 PM $XOM $BBRY $NOC $AMZN http://t.co/VkvlRkvcde
Seeking Alpha Alerts
3 Mar 15 17:56:11
@nybigtymer Subscribed to $AMZN To add another: subscribe $SYMBOL @sa_alerts To unsubscribe: unsubscribe $SYMBOL @sa_alerts
Rosa Barr
3 Mar 15 17:54:19
10 Things to Never Buy at Target http://t.co/9SspDkmxab via @daily_finance $TGT $WMT $AMZN
gawth
3 Mar 15 17:53:54
RT @TheStreet: $AMZN does drones: "Since day one, we have been building the infrastructure to support super-fast delivery " http://t.co/hrT…
stockmarketnow
3 Mar 15 17:51:18
RT TheStreet: $AMZN does drones: "Since day one, we have been building the infrastructure to support super-fast de… http://t.co/45S5qjkxGX
Vicky  Taylor
3 Mar 15 17:47:16
RT @TheStreet: $AMZN does drones: "Since day one, we have been building the infrastructure to support super-fast delivery " http://t.co/hrT…
Russell Barbour
3 Mar 15 17:45:47
http://t.co/pvDspdEZm7 <-- how to escape the 9-5 grind by learning to stock trade, knowledge is power $OIH $KRFT $SNE $AMZN $ICPT
TheStreet
3 Mar 15 17:40:07
$AMZN does drones: "Since day one, we have been building the infrastructure to support super-fast delivery " http://t.co/hrThBvWegG
C.R
3 Mar 15 17:39:46
FAA wants to speed approval process for drones http://t.co/Y6p0jLYlYz $AMZN
Judith Fischer
3 Mar 15 17:28:08
#6 Ways to Live Like You're Rich - but Not Spend a Lot http://t.co/iSMcziOY1V via @daily_finance $GRPN $AMZN
WLST.com
3 Mar 15 17:24:46
Why Is Amazon Mom Called Amazon Family Outside Of The U.S.? $AMZN $wlst #Amazon http://t.co/wN5EBNKYNm http://t.co/pR5d8Rjgn5
#SocialMedia NC
3 Mar 15 17:24:38
Why Is Amazon Mom Called Amazon Family Outside Of The US? - The Consumerist http://t.co/j8NwT8d2qk #Amazon • $AMZN http://t.co/eeCy0K9Gs4
				
				
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.