QUOTE AND NEWS
Forbes  29 min ago  Comment 
Wall Street is optimistic about Barnes & Noble, which is slated to report its third quarter results on Tuesday, March 10, 2015. Analysts project a profit of $1.19 a share, a rise from 86 cents per share a year ago.The consensus estimate remains...
TheStreet.com  Mar 4  Comment 
NEW YORK (TheStreet) -- It's all about focus, and fighting Amazon . Barnes & Noble's  recent decision to spin off its college books group is being sold to investors as a means of unlocking value by creating a separately traded stock for a...
Market Intelligence Center  Mar 3  Comment 
Barnes & Noble Inc (BKS) was selected by MarketIntelligenceCenter.com’s trade-picking algorithms today after trading between $24.86 and $25.78 on Monday before closing at $25.45. A diagonal spread using a long position in the Jan. '16 $10.00...
Wall Street Journal  Feb 26  Comment 
Barnes & Noble said Thursday that it plans to spin off its college bookstore unit from its retail and Nook operations, scrapping a plan to spin off its struggling e-book business.
Motley Fool  Feb 24  Comment 
During the financial crisis, this Fool worked at a Barnes & Noble. Here's how he made his way to the top of the store in less than two years and spearheaded an increase in same-store sales in the worst retail environment since the Great Depression.
TheStreet.com  Feb 12  Comment 
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.  TheStreet Ratings quantitative algorithm...
Market Intelligence Center  Feb 4  Comment 
For a hedged play on Barnes & Noble Inc (BKS) MarketIntelligenceCenter.com’s patented trade-picking algorithms selected a Jul. '15 $24.00 covered call for a net debit in the $21.86 area. That is also the break-even stock price for the covered...
The Hindu Business Line  Jan 27  Comment 
With an amphibious service, MEHAIR hopes to take air travel to every nook and corner
Wall Street Journal  Jan 20  Comment 
Barnes & Noble said that the chief executive of its retail group, Mitchell Klipper, will retire May 2, which is the end of the bookseller’s fiscal year.
Wall Street Journal  Jan 8  Comment 
Barnes & Noble’s consumer stores enjoyed an upbeat holiday period, but poor results at the Nook digital business potentially complicate plans to split that division off.




 

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
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