QUOTE AND NEWS
SeekingAlpha  Aug 26  Comment 
By Josh Arnold: Introduction Shares of embattled retailer Books-A-Million (NASDAQ:BAMM) have had quite the interesting history. Once a profitable bookseller, shares have languished in penny stock territory for years now following its fall...
Motley Fool  Aug 24  Comment 
The NOOK-branded device is the first new tablet to carry the Barnes & Noble brand since 2012.
Motley Fool  Aug 22  Comment 
Barnes & Noble and Samsung have collaborated on a new device to challenge Amazon's Kindle Fire.
The Hindu Business Line  Aug 21  Comment 
Retail bookseller Barnes & Noble and electronics maker Samsung introduced the Samsung Galaxy Tab 4 Nook on Wednesday in New York.The two companies collaborated on the latest 7-inch (17....
Motley Fool  Aug 20  Comment 
Barnes & Noble unveils its latest NOOK device. Can the bookseller make up its mind?
TechCrunch  Aug 20  Comment 
 In an effort to bring the Nook platform to a more familiar – and more fully-featured – device, Nook has announced the Samsung Galaxy Tab 4 Nook, a 7-inch tablet made primarily by Samsung. It includes something called the “Barnes & Noble...
The Hindu Business Line  Aug 20  Comment 
World-renowned yoga guru and founder of the Iyengar School of Yoga BKS Iyengar passed away here early this morning following illness. 96-year-old Iyengar had been ailing since some time...
Forbes  Aug 18  Comment 
Barnes & Noble's recent video promoting its upcoming Nook-Samsung Galaxy Tab 4 feels more like the classic Sesame Street pattern recognition game "one of these things is not like the others" than a "get-psyched" reel for a new tech product.
SeekingAlpha  Aug 13  Comment 
By Dana Skold: Much ink has been spilt, many trees have died, and many watts have been consumed discussing the collapse of the traditional book industry, the rise of eBooks, and Amazon's "disruption" of hidebound retailers. While a fascinating...
SeekingAlpha  Aug 12  Comment 
By Lior Ronen: Barnes & Noble (NYSE:BKS) made two announcements this year that may imply a change the company is about to go through in order to place its business on the path to profitability. The first announcement, made in June, was about the...




 

Barnes & Noble (NYSE:BKS) is the largest bookseller in terms of sales revenue in the United States.The company operates 1300+ stores and an online retailer Barnes & Noble.com. Its core business model relies on building local bookstores with comprehensive selection, attractive discounts and membership discount programs, and a community-gathering-place environment (e.g., the inclusion of a Starbucks cafe in each Barnes & Noble store).

Barnes & Noble has been suffering from diminishing margins as sales in the company's retail store struggle. Declining operating margins were mainly caused by higher discounts offered to compete with lower-priced online booksellers, one of the main negative pressures the print industry is facing right now due to a number of negative industry trends. To mitigate the company's slower retail book sales, Barnes & Noble has put a large amount of resources into the developing eBook market. As the demand for portable and low-cost books increases, the market for eBooks and eReaders will grow as well. Barnes & Noble's Nook offers wireless connectivity and access to millions of books. The company does face intense competition in the relatively young market, primarily from Amazon's Kindle 3, which has many of the same features as the Nook. The two companies have been engaged in price wars over the eReaders, something that is risky for Barnes & Noble. The two competitors also face competition from non-exclusive eReaders such as Apple's iPad.

Company Overview

Business Segments

Although the company does not give specific breakdowns of its business segments, it sells products in these general categories:

  • Books: Barnes & Noble stores offer a comprehensive selection of titles of trade and mass market books, ranging from 60,000 to 200,000 titles per store. Bestsellers represent 3-5% of all BKS sales.
  • Music/DVDs: Many Barnes & Noble stores have music/DVD departments, which range in size from 1,300 to 6,000 square feet and typically stock over 30,000 titles. The company’s DVD selection is focused on foreign films, documentaries and episodic TV shows.
  • Periodicals: Stores sell popular magazines and journals
  • Children's Books
  • Cafe: Each Barnes & Noble store features a cafe, serving Starbucks brand coffee and a range of baked goods. Starbucks (SBUX).

Business Growth

FY 2010 (ended May 1, 2010)[1]

  • Net income decreased 52% to $36.7 million.
  • Net sales increased 13.4% to $5.8 billion.

Trends and Forces

The eBook Revolution

The electronic book (eBook) revolution has arrived. Electronic readers (eReaders) offer portability and storage, language attributes, low cost for book purchases, access to millions of free books, and a smaller carbon footprint compared to print books among other benefits. As a result, eBook demand has skyrocketed, with revenue in the industry reaching $398 million in 2009 and expected sales to be $2.5 billion by 2013.[2]

The eBook revolution has spurred companies like Barnes & Noble and Amazon to develop their own eReaders. The two top eReaders in the market by sales are Barnes & Noble's Nook and Amazon's Kindle 3.

From Traditional to the Digital Market

Much of the slowdown in the sales revenue of the print retailers may be attributed to the increasing popularity and convenience of online retailers, especially Amazon.com. In fact, Barnes & Nobles expects the physical book market to decrease from $21 billion to $19 billion by 2013. Many online retailers are also a part of the CD and DVD retail segment, where Barnes & Noble has limited its exposure so as not to suffer from lagging sales of CDs due to digital media devices (mp3s), another edge for online retailers. To compete in the e-commerce sphere, Barnes & Noble established its own online retailing website.

Competition

The retail book market is slow to change and is at this point closed off from new superstore entrants. Barnes & Nobles looks to use its strong position as the leading U.S. bookseller to capitalize on its contracts with Starbucks for in-store cafes to maintain and grow its market share. Barnes & Nobles competes on two fronts, with other physical retailers and with internet booksellers.

Traditional Book Retailers

Barnes & Noble competes with other companies who share its model of having massive book superstores with thousands of titles.

  • Borders Group (BGP): Borders was the second largest book retailer in the U.S. and the largest mall-based bookseller in the country until it went bankrupt in 2011.
  • Books-A-Million (BAMM): Books-A-Million is a book retailer primarily in the southeastern US and is the third-largest book retailing chain in the country.

Online Booksellers

Amazon.com is the largest online competition for Barnes & Noble. Formerly partnered with Borders, Amazon offers the convenience of never having to leave your home to buy a book. Additionally, without some of the overhead inherent for B&M stores, Amazon.com can offer low prices or free shipping, leading to further price competition. Amazon also competes with Barnes & Noble's Nook in the eReader market with the Kindle 3.

Retail Megastores

Wal-Mart and Target are the main retail megastores, which sell everything from books to clothes to groceries. Despite not being a core sales segment of their business, these larger stores have had an impact on the sale of books by making best sellers more widely available. This puts pressure on traditional book retailers like Barnes & Noble to cut prices on bestsellers to retain store traffic, leading to diminished margins.

References

  1. BKS 2010 10-K "Selected Consolidated Financial Data" pg. F-1
  2. ZD Net "Kindle vs. Nook: The price war is on; E-reader shipments to surge?" 21 June 2010
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki