From AP Wire via Fox4KC.com
Barnes & Noble is being acquired by a hedge fund for $476 million and will be taken private.
The national chain that many blamed for the demise of independent bookstores has been ravaged by Amazon.com and other online sellers, but remains a critical outlet for publishers.
On Friday, it was acquired by Elliott Management and, in a twist, will likely become a national chain with a business model more akin to that of a local bookstore.
Elliott bought Waterstones one year ago, a national U.K. book chain that has successfully navigated through the online/e-reader revolution by returning a lot of autonomy to the managers of its nearly 300 stores, who can select books that they believe local readers want.
The man who runs that U.K. chain, who will become CEO of Barnes & Noble, said that is what he has in mind for Barnes & Noble.
Leonard Riggio acquired the century old Barnes & Noble in the 1970s, including its flagship Manhattan store, in the 1970s. He pursued aggressive expansion throughout the 1980s and established Barnes & Noble as a national phenomenon with the acquisition of B. Dalton Bookseller and its 797 locations in 1987. It became the nation’s second-largest bookseller and began selling books online in partnership with IBM and Sears.
The company continued to gobble up other larger booksellers like Doubleday Book Shops and also BookStop, which ran discount superstores in Texas.
By 1993, Barnes & Noble was a publicly traded company that was upending the publishing industry.
. . . .
Last year, Riggio was brought on stage [at] BookExpo 2018 in New York City.
. . . .
“Today, we stand together in common cause to promote and support bricks-and-mortar bookstores,” said Teicher. “I’ve been quoted as saying that it’s in the long-term interest of the overall book business that Barnes & Noble not just survive but grow and prosper.”
But Barnes & Noble has suffered.
With about 630 retail stores in the U.S. as of last year, it is smaller than when it acquired of B. Dalton Bookseller in the late 1980s. Its revenue peaked in 2012, and it has fallen every year since.
. . . .
“In chain bookselling, you need to try and get the best store for each location,” [new Barnes & Noble CEO James] Daunt told The Associated Press. “What works in Jacksonville, Florida, isn’t necessarily going to work in Hawaii.”
. . . .
Waterstones organizes multiple, simultaneous events at its stores, making them “a “fun place to discover books and enjoy the particularities of a bookstore.”
. . . .
Some industry watchers are skeptical, including Mike Shatzkin, the CEO of Idea Logical Company, a book-industry consulting company.
He called the entire large-store model for any retail chain “a 20th century concept” extinguished by the internet.
“It doesn’t surprise me that Barnes and Noble’s management never came to that conclusion because they built their fortune building bigger stores,” he said. “And I’m not sure Waterstone’s is going to lead them to a different approach.”
Link to the rest at AP Wire via Fox4KC.com
Mr. Daunt goes to New York…
https://www.thebookseller.com/blogs/jimmy-six-hundred-mr-daunt-goes-new-york-1020481
Interesting, very interesting.
“For Daunt the main focus will inevitably be on the bookstores, where he will want to empower booksellers to run their shops in the manner of how Waterstones operates today: effectively as a series of independents, only with the buying power of a chain and the centralising brain of Daunt and his senior buyers. He will focus on merchandising, including non-book, but the drive will be on making the shops attractive to book buyers first, casual shoppers only secondarily. Daunt says he will resist closing stores, but some operate in areas, many out of town, where footfall is perhaps too diminished even for him to work his magic. Nevertheless, his comittment to having bookshops in unfashionable locations is resolute: Waterstones would be a much more profitable business today had he closed some of its underperforming shops. Instead, he has turned them around, or simply made a case that their cultural significance was more important then their contribution.”
“US publishers, who are said to be jubilant and “pinching themselves” with delight at the development, would be wise to be cautious. It is likely that things will get tougher before they get better. They should remember that Daunt was not an overnight success, he is thoughtful and considered, and while he will want, and should get, their support his aim will be on improving the financial performance of his business, not theirs. ”
A bit early to be dishing out warnings but they are valid ones. For Daunt:
First is store sizes; big downsizing overdue. Another is population density around the bulk of the stores: if he takes “foot traffic” literally he is in for a shock. Then there is the fact that customer demographics are different. And that, despite the press angst over B&N as the sole national chain, it isn’t the only big chain. BAM and Half price have made it this far for a reason. They are not pushovers. And last I heard, Indigo is still trying to muscle in and there are still the Amazon B&M experiments; AmazonBooks and FourStar.
Glass half full there.
As for the publishers, lets see how delighted they are with the (likely) end of payola and guaranteed-all-store placement. B&N policy let them shelf titles on 600 stores all over with one deal. If Daunt really goes hyperlocal, those guarantees go away. Also, if he downsizes a lot of stores at once, that’ll be a whole lot of returns going back in one swoop. And that assumes he doesn’t start demanding bigger discounts.
B&N won’t die this year now and there is some hope but let’s not forget the price was relatively modest. A shutdown sale might bring back pretty big returns so if Elliot doesn’t see big improvement soon enough for an IPO they might go to plan B. and unlike Riggio tbeir investment is strictly money. But that won’t be until 2021 at the earliest, I think.
So B&N gets a two-three year reprieve.
That’s better than nothing.
What this tell me is that anyone with money at Elliott Investments needs to look closely at what’s going on, and maybe find another hedge fund.
B&N is *already* stripped down to its retail bones. It’s *never* going to be much better than a break-even deal. Their operating costs are too high, their margins too thin, their sales continue to decline.
The only asset B&N has that is worth anything is their real estate portfolio. The value of that is… questionable. While theoretically prime real estate, retail storefronts, particularly megastore-sized ones, aren’t a seller’s market any more. At least, there are plenty of empty ones near me. The ones that haven’t been razed or turned into mini-storage, anyway.
Maybe it’s a money laundering ring? Breakeven would be great then. 😉
It’s easy to see B&N selling $2B in books a year and figure there has to be a way to make money off that.
Still waiting for the money to change hands and Riggio be escorted out of the building – then I might believe …
At last, an accurate report!
All other reports included the debt assumed in the price which is what Elliot is spending but not what Riggio & co are getting.
Oh, and apparently Shatzkin hasn’t heard of the 900 sq ft mini stores Waterstones has in several locations.