Is Barnes & Noble Showing Weakness?
It seems Barnes & Noble (NYSE:BKS) is having trouble keeping up the popularity of its brick and mortar shops, even without the competition from the now defunct Borders chain. The company is expected to start closing more shops each year than it opens.
In the previous decade, Barnes & Noble would close roughly 15 stores a year, but also open another 30 stores. Those were the average annual numbers up to 2009. But now the tide is turning, and the company could be closing up to a third of its brick-and-mortar stores as part of an overall contraction.
Barnes & Noble currently has 689 physical stores, plus a separate division with 674 college locations. Of the 689, only 450 to 500 are expected to remain open after 10 years. This information comes from Mitchell Klipper, the chief executive of Barnes & Noble’s retail group. An average of 20 stores would be closed each year…
Klipper said that reducing the number of stores was a “good business model” and that “you have to adjust your overhead, and get smart with smart systems.” Scaling the business down and keeping things streamline may be what the B&N needs as reading habits change and technology changes the way people acquire reading material.
Barnes & Noble can be expected to maintain retail locations “for the long term,” according to spokeswoman Mary Ellen Keating. One thing the company will likely emphasize more and more is its Nook products, which are an essential way for the company to continue distributing books in the new reading paradigm.
However, it’s uncertain if Barnes & Noble will be able to lean on its Nook as a crutch for the declining popularity of brick-and-mortar bookstores, considering the Nook also saw its popularity weaken in the previous quarter. In the 9 weeks ending December 29, the Nook segment’s revenue dropped 12.6 percent year-on-year, and digital content sales grew at a slower rate from the previous quarter and previous holiday season.
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