Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?



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

By  +Follow June 26, 2014 6:48AM
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. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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

Results for amzn
Market Int Center
7 Oct 15 09:42:35
Amazon $AMZN Trading Near $558.94 Resistance Level ( http://t.co/VbLesXMxIM )
Keith Reynolds
7 Oct 15 09:41:51
$AMZN botched 2nd gen FireTV rollout. Dolby 5.1 doesn't work on competing svcs like $NFLX ..out come the pitchforks! http://t.co/gbs7NsFKQ1
Harriet Taylor
7 Oct 15 09:41:49
RT @SquawkStreet: ICYMI: @jonfortt talked to @Rackspace CEO about the co's new deal with $AMZN: http://t.co/4WWPtwx9Cv http://t.co/i6NMYLuf…
7 Oct 15 09:40:14
RT @EllyElllly: $AAPL ' no plans to bring the money back to the U.S' #APPLEGETOFFWELFARE $SPY $QQQ $AMZN
7 Oct 15 09:38:59
This Service Made 20,000% Gains In the Last Month! Subscribe Here http://t.co/9Vnnw3s1D8 .. $ORCL $YHOO $AMZN
7 Oct 15 09:38:17
RT @SquawkStreet: ICYMI: @jonfortt talked to @Rackspace CEO about the co's new deal with $AMZN: http://t.co/4WWPtwx9Cv http://t.co/ZAIT3Qok…
e jamelle Morgan
7 Oct 15 09:37:39
@SullyCNBC Congrats on Halftime and especially your honesty about the MANY probs with #aapl ecosystem. Why I choose $AMZN long ago! Pd off!
Thudder & Wicks
7 Oct 15 09:34:52
$AMZN #AWS Is Now A $7.3B Business As It Passes 1M Active Enterprise Customers http://t.co/z1iZFHAN8Z
7 Oct 15 09:34:50
$AAPL ' no plans to bring the money back to the U.S' #APPLEGETOFFWELFARE $SPY $QQQ $AMZN
Stock Trade Alerts
7 Oct 15 09:32:17
Can hear $AMZN Jeff Bezos laugh already... http://t.co/TAIFUZsPKb ~ via @AlertTrade
7 Oct 15 09:31:42
@cloud_opinion $amzn down more than $orcl and $data
Hot Stocks NYC
7 Oct 15 09:30:40
$qld hit $googl $fb $amzn $FFIV weak :-)×amgn $celg strong buy on weakness or lack of $skx rallied 5 pts I did not play hope udid
Larry Levin
7 Oct 15 09:30:27
Stocks to Watch: $INTC $AAPL $GOOG $IBM $AMZN $BIDU $TSLA $YELP $LNKD $FB http://t.co/PLULbLyDaF
Jon Fortt
7 Oct 15 09:29:49
RT @SquawkStreet: ICYMI: @jonfortt talked to @Rackspace CEO about the co's new deal with $AMZN: http://t.co/4WWPtwx9Cv http://t.co/i6NMYLuf…
Squawk on the Street
7 Oct 15 09:29:48
ICYMI: @jonfortt talked to @Rackspace CEO about the co's new deal with $AMZN: http://t.co/4WWPtwx9Cv http://t.co/ZAIT3QokJO
7 Oct 15 09:29:33
Doing some front running: Went LONG $AAPL $AMZN $GOOG $MSFT $SBUX $GS $NFLX $WYNN $CELG $REGN $AAL $GMCR $BIIB $PCLN $ALXN $MAR $V #markets
Harriet Taylor
7 Oct 15 09:29:16
W/ #AWSReinvent "Snowball" $AMZN draws on retail giants tracking & shipping experience @CNBCtech http://t.co/kfyFaF4Prf
Squawk on the Street
7 Oct 15 09:28:48
ICYMI: @jonfortt talked to @Rackspace CEO about the co's new deal with $AMZN: http://t.co/4WWPtwx9Cv http://t.co/i6NMYLufIL
7 Oct 15 09:28:31
RT Options Scanner shows http://t.co/c73nuNMwrv $AMZN December 600 call option implied volatility increased 3% to 39 .
7 Oct 15 09:25:08
Can hear $AMZN Jeff Bezos laugh already... http://t.co/VWfuIqVfdp
Anand Ranganathan
7 Oct 15 09:20:32
Now all Jet needs to do is buy search ads on $AMZN to bring in the ecommerce traffic, because this: http://t.co/4BY8mWL5cP
7 Oct 15 09:13:44
Eyeing $AMZN for a possible short sell trade
Vlad Mazek
7 Oct 15 09:10:09
Taking a day off today. At a glance, #momo and #fang just look tired a bit $NFLX $AMZN $GOOG $FB and then there is $TSLA - see ya tmrw
a. quant
7 Oct 15 09:07:00
$AMZN $ATTU @Attunity Extends Big Data Solutions to #Hadoop on the #Cloud http://t.co/RcWaJxk1JK #BigData #AWS #EMR #EC2 #CloudBeam
Matthew Littlefield
7 Oct 15 09:06:37
RT @LouisColumbus: Amazon’s AWS Is Now A $7.3B Business As It Passes 1M Active Enterprise Customers http://t.co/f6wXfOqDtx $AMZN #Cloud #En…
AMA Toronto Chapter
7 Oct 15 09:02:31
What does @Amazon do better than any other brand? Personalization. Here's why. http://t.co/ha3Kb2UPdw $AMZN http://t.co/8ofriW3Fpd
7 Oct 15 08:59:17
@BrattleStCap sure it does...they are diff for each but ppl were shorting $AMZN at less than 2x sales and that was stupid
7 Oct 15 08:58:04
Amazon’s AWS Is Now A $7.3B Business As It Passes 1M Active Enterprise Customers http://t.co/f6wXfOqDtx $AMZN #Cloud #EnSW
7 Oct 15 08:56:36
People who short things like $TWTR & $AMZN at depressed lvls when low earnings are priced in just prove they have no innovative thought
Jeff Frick
7 Oct 15 08:51:29
@ajassy has 1,283 followers Watch that grow @verified , give the man a check #AWS #reInvent $AMZN #theCUBE #AWSCloud
7 Oct 15 08:51:18
$AMZN y's this down? iznt this illegal?
Lucky Jimmy
7 Oct 15 08:48:03
XIV VelocityShares Daily Inverse VIX Short Term ETN Day Low http://t.co/leXtRfx7N0 $XIV $QID $BTU $AMZN #XIV #stock #tradeideas
Perennial Capital
7 Oct 15 08:45:40
sell off in #tech #stocks keeping the indices down. lucky that strength in #biotechs cap the losses. $googl $tsla $amzn $fb $regn $alxn
7 Oct 15 08:45:04
TCK/B.TO Teck Resources Ltd. EOD Data http://t.co/gqgoJwTP5H $TCK/B.TO $ERY $AMZN $XLV #TCK/B.TO #stock #stockmarket
Jeff Frick
7 Oct 15 08:40:50
@ajassy has 1,283 followers Watch that grow @verified , give the man a check #AWS #reInvent $AMZN #th... #reinvent http://t.co/117G5HDW8A
7 Oct 15 08:38:14
GLD SPDR Gold Trust Shares Short Sales http://t.co/r0BqQiGiXX $GLD $AMZN $UNG $DWTI #GLD #tradeideas #invest
7 Oct 15 08:36:32
out of $GOOGL and $AMZN puts for now. 450% and 75%, respectively.
Ardavan Homayounfar
7 Oct 15 08:36:04
Better make room for a decade of losses in your business model if you're going after Bezos. $AMZN #Jet https://t.co/Xkv5QPT19p
Jeff Frick
7 Oct 15 08:35:02
The Keynote is underway #theCUBE #AWS #AWSCloud $AMZN http://t.co/OJIcPoYt4D #reinvent http://t.co/KhdvmktcIw
Steve Wakelin
7 Oct 15 08:34:29
Covered my morning shorts at the 197.81 level and will look to re short up around 199 again. Long $TSLA and Long $AMZN
Vivek Saxena
7 Oct 15 08:33:53
Surprise! http://t.co/Iv0fdwHVvO Overhauls Business Model, Kills Membership Fee http://t.co/lzDVuBbwNT @jet #ecommerce #retail $AMZN
7 Oct 15 08:33:20
$AMZN Online Retailer http://t.co/4C5Trv1EyF Ends Annual Membership Fee -Re/code http://t.co/wMK7UYx40u
7 Oct 15 08:33:03
CCO.TO Cameco Corp. Short Sales http://t.co/18nEjypxYo $CCO.TO $FB $FXI $AMZN #CCO.TO #tradeideas #stockmarket
7 Oct 15 08:32:25
AMZN http://t.co/fAsmgI1Lyx, Inc. Yield http://t.co/1zAMQoV3lG $AMZN $GPRO $XLU $GDXJ #AMZN #share #stocks
7 Oct 15 08:30:21
Closed out +36% on our live $AMZN put trade from yesterday and over $5,300 on $AMZN puts today http://t.co/7hyBhIfUyP
7 Oct 15 08:30:20
RT @NASDAQPlays: http://t.co/dObsQpGB8p covers all your favorite #NASDAQ stocks - join our email list today - $AAPL, $FB, $AMZN http://t.co…
7 Oct 15 08:28:03
$AMZN - Online Retailer http://t.co/sZPsIs1Tf1 Ends Annual Membership Fee -Re/code http://t.co/4Ddom5grd8
7 Oct 15 08:28:02
$AMZN - Online Retailer http://t.co/fZDCu2EnMj Ends Annual Membership Fee -Re/code http://t.co/XhPtdfvfrh
7 Oct 15 08:26:02
$AMZN working on a reverse H&S pattern. http://t.co/T4fdkseIaY
Breaking News
7 Oct 15 08:22:02
$FB $AMZN $GOOGL $ANGI: Facebook Plunges Into Home Repair Matchmaking Service: http://t.co/RtHkGjl1e9
By  +Follow June 26, 2014 6:48AM



blog comments powered by Disqus

 Today's Must Reads

Market Got You Down?: Here Are Six Hot Stocks

Global Winners and Losers in the Oil Shakeout

This Bull Market is No Stranger to Big Fourth-Quarter Comebacks

When to Sell and When to Rent an Investment Property

Saving the Small-Cap Market


Small-cap stocks offer investors many benefits, ranging from higher growth potential to overlooked value opportuni... in Equities.com's Hangs on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

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

Login or Register