QUOTE AND NEWS
New York Times  Oct 22  Comment 
The bookstore giant, which was wooed and cajoled to come to the borough in the 1990s, plans to close its store in Co-op City in late December.
The Economic Times  Oct 14  Comment 
According to BKS officials, Gujarat unit, almost 90% crops cultivated under the greenhouses have failed in the northern parts of Gujarat.
StreetInsider.com  Oct 8  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/NOOK+Media+%28BKS%29%2C+OverDrive+Enter+Partnership+Covering+NOOK+Newsstand/9895919.html for the full story.
SeekingAlpha  Oct 8  Comment 
By Jeremy Raper: Regular readers of my articles will recall I love looking for asymmetric value propositions on the long side - situations where if you get it right you do very well, but even if you get most of it wrong and a little bit right you...
newratings.com  Oct 7  Comment 
SEOUL (dpa-AFX) - Samsung Electronics America and NOOK Media, a subsidiary of Barnes & Noble, Inc. (BKS), Wednesday announced the introduction of the 10.1-inch Samsung Galaxy Tab 4 NOOK. This is a new large-screen version of the popular tablet...
SeekingAlpha  Oct 1  Comment 
By InvestAlike: Barnes & Noble's (NYSE:BKS) share price has gone up by 36% year-to-date. The company is presently in a turnaround phase and these efforts are now stabilizing the business operations. This is why losses have started narrowing for...
Market Intelligence Center  Sep 29  Comment 
For a hedged play on Barnes & Noble Inc (BKS), MarketIntelligenceCenter.com’s option-trade picking algorithms recommend the Jan. '15 $19.00 covered call for a net debit in the $18.00 area. That is also the break-even stock price for the covered...
Forbes  Sep 25  Comment 
You're about to put your house on the market! Congrats—that’s a big move. When that for-sale sign goes on the front lawn, dozens of eager real estate agents and many potential buyers will stampede through your front door and into every room of...
DailyFinance  Sep 24  Comment 
Barnes & Noble, Inc. (NYSE: BKS), the nation’s largest retail bookseller and the leading retailer of content, digital media and educational products, today announced that September 30 is “The Day the Crayons Decide.”...
DailyFinance  Sep 18  Comment 
Leisha Kelsey from West Jordan, Utah, Phillip Roberts from Kingsport, Tennessee, and Matthew Buckley from Washington, D.C., were each named grand prize winners and awarded $5,000 in the Scotch Make Amazing Contest. Scotch...




 

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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