Waterstones is Buying Foyles

7 September 2018
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From The Digital Reader:

Two UK bookstore chains are merging. Waterstones, a chain of 250 stores with revenues around 388 million pounds per year, is buying Foyles, a chain of 7 stores generating around 25 million pounds per year (according to revenue statements filed with Companies House).

This is a big deal in the UK because these are two of the biggest bookstore chains in the country. The combined revenues are about the same as Books-a-Million’s revenues here in the US.

James Daunt, Waterstones m.d., said: “We are honoured to be entrusted with the Foyles business, and greatly look forward to joining forces with the Foyles bookselling team.  Together, we will be stronger and better positioned to protect and champion the pleasures of real bookshops in the face of Amazon’s siren call. It is an exciting and invigorating time in bookselling as good bookshops are rediscovering their purpose in the fight back against online and e-reading.  At Waterstones, we see our future as responsible stewards of shops that strive to serve their customers each according to their own distinct personality.  This is nowhere more important than with those shops – Hatchards, Hodges Figgis and now Foyles – that have such singular heritages.

Link to the rest at The Digital Reader

PG is a big fan of Amazon’s siren call.

Barnes & Noble Sales Slide Continues as It Looks to Stabilize Business

6 September 2018

From The Wall Street Journal:

Barnes & Noble Inc.’s sales swooned in the latest quarter as the struggling bookseller continued to face challenges in attracting people to its stores.

Comparable sales for Barnes & Noble declined 6.1% for the period ended July 28, a result the company said was lower than planned. Total sales declined 6.9% to $794.8 million. Problems for the company also extended to its online channel, as sales fell 14%, in part because of fewer promotions.

Despite the quarterly result, Executive Chairman Leonard Riggio said the company is making progress in efforts to stem the sales decline. Barnes & Noble reported sequential improvement in comparable sales in the past few months, with the metric falling 0.8% in the month of August.

. . . .

Barnes & Noble, the nation’s largest bookstore chain, reported a first-quarter loss of $17 million, or 23 cents a share, compared with a year-earlier loss of $10.8 million, or 15 cents a share. In addition to falling revenue, the company’s results were hurt by a smaller income-tax benefit.

. . . .

Shares of Barnes & Noble, down 31% year to date, were off 7.6% at $4.58 on Thursday afternoon.

. . . .

In a discussion with analysts, Mr. Riggio briefly addressed Mr. Parneros’s lawsuit, saying that the board had acted after “multiple events of significant misconduct, including sexual harassment, bullying behavior and other violations of company policies.” In his lawsuit, Mr. Parneros denied that he had engaged in any misconduct at Barnes & Noble.

Mr. Riggio also took umbrage at Mr. Parneros’s description of his views regarding certain current and former senior staffers, describing the lawsuit as containing “outrageous lies and personal attacks.”

. . . .

Barnes & Noble, Mr. Riggio said, will address the subject of finding a new CEO after the retailer’s annual meeting on Oct. 3. The board will then decide which search firm to hire and which board members will be involved.

“Right now, we aren’t looking,” Mr. Riggio said.

. . . .

John Tinker, an analyst for Gabelli & Co., said he wasn’t surprised the company didn’t address the potential sale. “They’re betting on Christmas coming through, because that will mean they still have a business model,” said Mr. Tinker. “If the holiday period isn’t good, it will show the company is adrift.”

Link to the rest at The Wall Street Journal

Barnes & Noble Inc.: How Low Can It Go?

5 September 2018

From Seeking Alpha:

Barnes & Noble Inc., even though it maintains a high dividend payout which keeps shareholders in the fold, is increasingly under pressure to successfully turn the company around as it continues to shed revenue and same-store sales.

The other major problem is it has failed to attract meaningful sales to its e-commerce platform, which had sales plunge by over 9 percent in the last reporting period.

With its struggle to survive it has resulted in an incoherent vision of the future for the company, as it tries to find something that’ll stick and help the company work from a sustainable bottom. As it is, it has yet to find a bottom, even with a wide variety of steps being taken to turn things around.

. . . .

To say the latest performance of Barnes & Noble was underwhelming would be an understatement; it was a terrible thing to hear and see.

Once again, retail sales were down, dropping to $765 million, a decline of 3.9 percent. Citing lower store traffic, same-store sales fell 4.1 percent in the fourth quarter.

Same-store sales unrelated to books plunged 4.5 percent, while book sales were down 3.4 percent year over year. For non-book sales, the major negative catalyst categories there were DVD, Gift and Music. They were all down in the double-digit range.

. . . .

For full year, same-store sales were down 5.4 percent on declining traffic. Online sales were a disaster, down 9.6 percent for the year. Most of that was attributed to lower conversion rates, primarily because of a poorly designed e-commerce site in my opinion.

Consolidated gross margins for the quarter fell $13.5 million on lower sales volume. The company said that was “due primarily to occupancy de-leverage and higher markdowns to clear-up non-returnable merchandise.” On the higher markdowns, it’s a concern because of the inability of management to select the type of merchandise that consumers want.

. . . .

One of the major problems in my view now that Barnes & Noble has gone through a prolonged period of being disrupted, is it has struggled to find a vision. It has been somewhat successful outside of its core business, with toys and games experiencing some success, along with its café business. This is obviously not enough to offset plummeting sales.

Also, an obvious issue for the company is the declaration by its former CEO that it had in fiscal 2018 “created an aggressive long-term strategic turnaround plan, which we have already begun to execute.” That should have already been in place many years ago. Part of that problem is the removing of CEOs on a consistent basis, making it hard for Barnes & Noble to put a long-term vision in place.

. . . .

One positive step the company is taking in regard to growth is its attempt to enhance the customer experience at its stores. To do that it’s focusing on its core business as a bookseller by developing and offering its Barnes & Noble Book Club, which launched in May 2018. The problem concerning this to me is why it took so long to do the obvious.

. . . .

As mentioned earlier, e-commerce sales once again plummeted, this time by almost 10 percent. This is problematic to me because it appears Barnes & Noble is looking at highly-trafficked neighborhood stores as its future model. If that’s the case, then having a well-functioning e-commerce option that includes local delivery is a must.

From looking at the e-commerce site, it appears the company has given up on growing that part of its business. It seems it has been intimidated by the expertise of Amazon to the point of giving up. I think that’s a huge mistake. If it can make some decent improvements to its e-commerce website and provide a nice delivery option to consumers, it should do very well in complementing its new physical stores, or some of the downsized stores from existing locations.

. . . .

The major problem Barnes & Noble has to me is a management one. Until that is solved and it puts together a vision of the future that it is committed to and adheres to for the long haul, it’s going to be a company that struggles to survive.

If the cash flow ever dries up and the hefty dividend yield is cut, it could signal the end of the company – either through bankruptcy or being acquired.

Link to the rest at Seeking Alpha

How Baltimore’s independent bookstores are thriving in the age of Amazon

5 September 2018

From The Baltimore Sun:

What if the pterodactyl had refused to go extinct? What if you moseyed down the 6000 block of Falls Road or the 1700 block of Aliceanna Street and found a brontosaurus sitting on the corner?

In a sense, when you walk into the Ivy Bookshop or Greedy Reads — or A Likely Story in Sykesville or Red Emma’s in the city, or too many other independent booksellers to mention — that’s exactly what you’re seeing.

For the last decade, pundits have decried the imminent death of the publishing industry and in particular, of brick-and-mortar book bins, which peaked in the 1990s at about 3,000 stores, according to the American Booksellers Association. The stratospheric rise of Amazon supposedly had placed the indies on life support, just as eBooks were thought to be killing off physical volumes. The statistics were grim — from 1995 to 2009, the number of independent bookstores in the nation fell by a staggering 43 percent. Later, the highly visible shuttering of behemoth Borders Books in 2011 lent credence to the gloomy prognosis.

But not only did the independents refuse to die, they rebounded and even experienced a growth spurt. In 2018, the ABA has 1,835 members operating 2,470 locations — a 31 percent increase in companies and a 49.6 percent increase in the number of physical stores in just nine years.

“The urban legend about indie bookstores being an endangered species has been hard to break,” said Oren Teicher, the association’s chief executive officer. “Amazon remains a fierce competitor, but we’re hanging on. Physical bookstores are not going away.”

. . . .

Teicher said buying books is different than shopping for other consumer goods.

“Book purchases happen by discovery,” he said. “The overwhelming majority of books are bought because you find them on the shelf of a bookstore or a library or because they were recommended by someone you trust. Interacting with the physical book is very important. You need exposure to the product to make the sale.”

Link to the rest at The Baltimore Sun and thanks to Nick at The Digital Reader for the tip.

The best part is still ahead of me – I haven’t experienced my ‘good old days’ yet. ~ Luther Vandross

PG says Oren Teicher demonstrates astounding perspicacity. Nobody buys books online because they can’t interact with the physical book first. What a fool PG has been because he didn’t realize that.

Finally, an explanation of why Barnes & Noble’s sales are booming and Amazon is facing bankruptcy. Authors can say goodbye to those monthly ebook royalty payments from Seattle because they’re going to dry up any day now.

If posting is a little thin today, it’s because an obsession is growing in PG’s lizard brain.

Go fondle a book. Just one. Well, maybe two, but then I’ll stop. This time will be different. I won’t wake up in a strange hotel room, lying on the floor surrounded by open hardbacks I don’t remember buying.

Publishers Puzzled, Frustrated by Parneros Lawsuit

2 September 2018

From Publishers Weekly:

The revelations disclosed in former Barnes & Noble CEO Demos Parneros’s lawsuit, filed Tuesdayand charging the company with defamation and breach of contract, left publishers mystified at how the nation’s largest bookstore chain will turn around its financial fortunes.

“Indecipherable” was the one-word email response from the president of an independent publisher when asked about the recent events at B&N. “I don’t know what to make of the news,” another executive at a publisher said. “It’s still unsettled over there.”

. . . .

Whatever the merits of the case, publishers said it is clear that the time has come for B&N to find new leadership, either by a sale of the company or finding a CEO with a new vision for the company. Since Parneros’s dismissal, the company has been run by the trio of Allen Lindstrom, chief financial officer; Tim Mantel, chief merchandising officer; and Carl Hauch, v-p, stores. Riggio remains executive chairman and will be involved in its management until a new CEO is found.

“B&N needs to take action and needs capital to do it,” one publishing executive told PW. “Clearly being acquired is one way to get that done. There are other ways, but something needs to happen.”

An independent publisher who viewed some of the charges in the lawsuit being made “by a guy who is really pissed off and wants his severance,” nonetheless agreed that B&N “needs to create a smooth transition for Len.”

. . . .

“I think it’s time {B&N} gets a new owner,” the head of an independent publisher said. “One that’s interested in being in the book business and has a proper management team. Someone like Indigo would be great.”

. . . .

Several publishers said the frustrating part of Parneros’s departure is that it finally looked like B&N had a plan in place to move forward. Parneros was “candid about the issues B&N faces,” one executive said, adding that the plan he laid out seemed workable if given some time. All publishers would like to see the next B&N CEO have book experience. And there is one other characteristic they would like to see—a CEO who is actually running the company.

Link to the rest at Publishers Weekly

Who Wants to Buy Barnes & Noble?

30 August 2018

From The New Republic:

Can things get worse for Barnes & Noble? In 2018, it comes across as a silly question. Decades removed from its heyday as the brutalizer of small bookshops—the inspiration for Tom Hanks’s soul-destroying monolith in You’ve Got Mail—the store is running on fumes. Its stock price sits at five dollars. Its high-profile attempts to compete with Amazon in e-commerce and e-books have been expensive failures. It has had four CEOs in the past five years, a period in which it has closed stores and laid off staff, including 1,800 in February.

But on Tuesday, Barnes & Noble hit a new low when its last CEO, Demos Parneros, sued the company for defamation and breach of contract. Parneros alleges that he was pushed out after a deal to sell the company to an unnamed buyer fell through, and that Barnes & Noble covered it up by bringing bogus charges of sexual harassment and bullying against him. Barnes & Noble fired back that Parneros had been “terminated for sexual harassment, bullying behavior, and other violations of company policies.” (It had previously declined to specify the former CEO’s alleged misdeeds in a statement announcing his departure on July 3.)

Parneros’s filing is apparently designed to generate a settlement and should be taken with a grain of salt. Still, its contents are damning. It portrays a company in dire straits being presided over by a longtime chairman, the 76-year-old Len Riggio, who spends his time berating subordinates. While Riggio has presented himself as the heart and soul of the company, the lawsuit depicts him as an albatross. It shows that the company is struggling in every conceivable aspect of its business, which means that finding a new CEO—let alone a buyer capable of turning the company around—will be exceedingly difficult.

. . . .

An art collector and philanthropist with a ruthless streak, Riggio spent two decades steamrolling independent booksellers and bending publishers to his will. But when Amazon emerged, Riggio was caught on his back foot. He lacked Amazon’s technical expertise and its even deeper pockets. Barnes & Noble’s attempts to compete with Amazon—a clunky website, then a clunky e-reader—were disasters that cost the company hundreds of millions of dollars.

Between Amazon’s disruption, the 2008 financial crisis, and the ongoing retail apocalypse, Barnes & Noble has struggled to stay afloat. It has lost money in eight of the last ten quarters and six of the last eight years. Riggio has at times seemed ready to exit the company: He announced his retirement in 2016, but never stepped down as chairman.

. . . .

There has been growing frustration with Riggio in the publishing industry, as Barnes & Noble has failed to settle on a strategy after it all but abandoned its e-book business. Since Borders went out of business in 2011, publishers have become enormously dependent on Barnes & Noble, which for many is their second-largest account after Amazon.

According to the suit, Riggio’s solution may be to just sell the company.

. . . .

Who could this retailer be? It’s unlikely to be Amazon, which is forging its own path and has thus far seemed only marginally interested in physical book retail. It’s not clear that Books-a-Million and Half-Price Books, the second- and third-largest general trade book retailers, have the resources, let alone the ambition. One possible candidate, according to multiple sources in book publishing and retail, is the Canadian book seller Indigo, which has defied the bleak trends in publishing in recent years, posting profits and selling literary fiction by the crateload. (People in book publishing talk about Indigo the way liberal voters talk about moving to Canada—as an almost mythical promiseland.)

Link to the rest at The New Republic

Barnes & Noble Stock Price

28 August 2018

From NMSU News:

Barnes & Noble, Inc. (NYSE:BKS) subtracted -5.22% to its trading price by the close of the most recent session, dropping from its previous closing price of $5.75 to $5.45. This stock decreased in value by -9.17% during the last 7-day period, and experienced a loss of -9.17% over the past 30-day period. In the past three months, this stock’s price lost by 1.87% , and added 19.78% to its price during the last six months of trading. BKS demonstrated a yearly price loss of -28.76% , while its year-to-date (YTD) price performance has been down -18.66% .

Link to the rest at NMSU News

Barnes & Noble, in Fight With Former C.E.O., Says He Was Fired for Sexual Harassment

28 August 2018

From The New York Times:

When Barnes & Noble fired its chief executive, Demos Parneros, last month, the bookseller was mysteriously quiet about why.

On Tuesday, the explanation came spilling out in a public exchange of accusations between Mr. Parneros and the company — including that Mr. Parneros was fired in part because of claims of sexual harassment by an employee.

The fight began when Mr. Parneros filed a lawsuit Tuesday claiming defamation and breach of contract. Mr. Parneros said in his complaint that he was fired without warning after a deal to sell the company fell through. Casting himself as a “well-respected retail executive,” he claimed that the bookseller had enabled rumors that he was let go because of “serious sexual misconduct.”

He described Barnes & Noble as a “financially troubled business” led by “a volatile founder who refuses to relinquish control.”

. . . .

In its response, Barnes & Noble’s board said in a statement that Mr. Parneros had been “terminated for sexual harassment, bullying behavior and other violations of company policies.” Until Tuesday, the company had said only that he was terminated without severance for violating policies, without explaining which ones except to say they were not related to financial matters.

. . . .

Publishers and investors have grown increasingly worried about the company’s future. Some industry analysts argue that Mr. Riggio has been too heavy handed in steering the company and lacks the vision to guide its recovery at a tumultuous moment.

. . . .

Barnes & Noble’s stock price has fallen 60 percent over the last three years, and the chain has struggled to reverse years of declining sales and foot traffic. In the last decade, the company has closed more than 150 stores, leaving it with a base of 633. It waged a losing battle with Amazon for a slice of the e-book market, and lost more than a billion dollars on its Nook e-book business.

Even as independent bookstores have bounced back and Amazon has expanded into brick-and-mortar retail, Barnes & Noble has still failed to recover ground.

But Mr. Parneros said that he was lavished with praise by Mr. Riggio, the Barnes & Noble board, investors and publishers as he helped roll out new store prototypes and sales categories.

In November, the activist investor Sandell Management offered to buy the chain, an overture that Barnes & Noble refused. In the spring, a book retailer made a bid, which Barnes & Noble also declined, according to Mr. Parneros.

. . . .

In June, after conducting due diligence, the second purchase offer was withdrawn, leaving Mr. Riggio “extremely upset” because he “no longer had a graceful exit from the company,” according to Mr. Parneros’ lawsuit.

Link to the rest at The New York Times

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