From Publishers Weekly:
Barnes & Noble’s disappointing holiday sales have not diminished the retailer’s resolve to get its bricks-and mortar stores on firm ground, CEO Len Riggio told PW in an interview last week, following the announcement that comparable store sales fell 9.1% in the nine-week period ended December 31, 2016.
For the fiscal year ending in April, Riggio said B&N still plans to close a total of 12 outlets while opening four. In fiscal 2018, he expects B&N to be “store positive.” Riggio attributed the weak holiday results largely to a decline in customer traffic that affected many retailers for much of 2016. Riggio observed that with traffic down for many retailers, it was difficult for an individual store to build sales momentum on its own.
Riggio was widely quoted as predicting that store traffic would improve after the presidential election, but he acknowledged that this did not occur. “People were not in a celebratory mood,” Riggio said. In the four days following the close of the holiday period, sales and traffic did improve, but Riggio admitted it was hard to draw too many conclusions from such a small sample. Still, he still expects customer traffic to rebound at some point in the new year. “People will be looking to move on with their lives,” he said.
. . . .
With more sales moving online, Riggio said he was encouraged by the performance of BN.com, which had a 2% gain over the holidays. He acknowledged that the company had a hard time improving the consumer experience of the site, but believes the newest version is much more consumer friendly. “We finally saw an uptick [in sales] at BN.com. It has finally been debugged,” Riggio said. “We have plenty of room for growth.”
Link to the rest at Publishers Weekly
The well-known definition of insanity! 🙂
When you own 20% of a company, you reaffirm everything. What’s the alternative?
Well, he can’t parachute out so he either admits he screwed up and fixes it while it can still be fixed or he rides it all the way down to the crater.
He seems to be going for the latter.
I don’t see the choice. How does he fix it? The best alternative is to ride it out with as much cash as possible. People tell us all the things B&N is doing that are wrong, but we don’t hear what B&N should be doing.
Chapter 11, of course.
Break the leases, close the marginal warehouses, and use the savings to open smaller stores.
Instead of trying to monetize the fallow floor space, get rid of it and focus on what their brand can sell profitably. Which is mostly books, not toys and not food.
Again, Best Buy has been doing that for years.
http://www.mercurynews.com/2012/03/29/best-buy-plans-to-close-50-big-box-stores-focus-on-smaller-mobile-stores/
B&N has to choose between viable bookstores and giant storefronts. So far they are sticking with the big storefronts despite all the evidence they are more trouble than they’re worth.
How much would Riggio get from a bankruptcy?
Why invest anything in bookstores?
Target, Walmart, and Amazon have a competitive advantage in selling books. B&N doesn’t.
The B&N brand still means something to some people. There are actually people that prefer to shop there. Just not enough to support those big stores.
A rinse through Chapter 11 while they still have useful assets lets them restructure to a survivable model. Alternately, the can wait until they have no other choice and risk getting pushed into liquidation.
Of course, if Riggio prefers to be remembered as the guy who built B&N up and then ran it into the ground…
Wouldn’t be the first one to destroy what they built.
> Target, Walmart, and Amazon
Those are not all the same type of store.
Amazon is an online merchant. They started off as a book store, but now sell a huge variety of items.
Wal-Mart is primarily brick-and-mortar. They sell a *much* smaller variety of items. In particular, their book racks are stocked by the same company that stocks some local grocery stores; a very limited supply of best-sellers, moldy reprints, and (what looks like) whatever they got for cheap.
I have no idea what they sell in Target; the store has signs on the doors saying they don’t recognize my civil rights. In return, I’m happy not to give them my money.
There’s plenty of room for B&M bookstores out there.
There’s even room for 50 or so mega stores.
What isn’t out there is room (or custom) for 500 mega stores.
Somewhere in B&N’s attic they have the blueprints for the old B. DALTON stores. They need to dust them out. Then they can rinse B&N through chapter 11 and start reconfiguring.
Only problem is, if they don’t do it soon it’ll be too late for even that.
The “mega store” is the root problem. They’re likely quite profitable due to economies of scale, but there are only so many places that will support one. And when demographics shift, you’re left with an expensive lease and operational overhead.
Putting your stores in urban megalopoli looks like a good idea… but Amazon is the same number of clicks away whether you live in Manhattan or Hooterville.
I don’t think store size is the issue. Smaller stores are going belly up all the time. The root problem is that a bookcase of paper books isn’t generating enough money to pay the rent and overhead on the space it occupies. It doesn’t matter how many of these bookcases you have.
Store size matters to the extent that if defines the cost envelope which in turn defines the traffic required to break even. In every case of bad news from B&N the recurring theme is either high cost or traffic shortfall or both.
It is not the only contributor to bookstores failing but in B&N’s specific case (much like Best Buy’s own troubles) it is the one factor that is very much in their power to control. Best Buy improved their situation a lot by shifting to smaller stores and refocusing on higher margin, high traffic merchandise. They also improved their online operation, added ship to store, and aligned online and B&M.
B&N has kept the store sizes and is instead frantically trying to find something, anything, that will make them profitable. And failing.
It’s a scale mismatch.
They’re reducing the number of stores when they should be reducing the size of the stores to what the traffic will support.
“They’ll be back!!” — Riggio
Riggio reaffirms he has the deckchairs just where they need to be to keep the ship from sinking (any further) and he’s now trying to convince the band to continue playing.