Barnes & Noble Completes Sale to Private Fund Manager

Barnes & Noble, America’s largest brick-and-mortar bookseller, Aug. 7 announced the successful closing of its $683 million acquisition by Elliott Advisors Limited, a private fund manager located in the United Kingdom.

Elliott’s purchase follows its 2018 acquisition of Waterstones, the largest retail bookseller in the U.K.

Barnes & Noble operates 627 retail stores across all 50 states, where it remains the #1 retail bookseller in the U.S. The retailer also operates BN.com website as well as Nook tablet business, which includes the sale of digital movies and TV shows.

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Elliott seeks to deploy the same strategy it claims turned around Waterstones in an age of ecommerce and Amazon. Elliott will own both Barnes & Noble and Waterstones and, while each bookseller will operate independently, James Daunt, CEO of Waterstones, will serve as CEO of both companies and relocate from London to New York.

“This is a very good day for bookselling,” Daunt said in a statement.

“Barnes & Noble is the greatest of all bookstore names and will now benefit from the support of an owner committed to physical bookselling. With investment and concentration on the core principles of good bookselling, the prospects for this extraordinary company are bright.”

Paul Best, portfolio manager and head of European private equity at Elliott, said the $38.2 billion fund remains committed to bookselling and “real” bookstores.

“Barnes & Noble has an extraordinary heritage, one that we want to protect and grow,” Best said.

As a result of the merger, Barnes & Noble becomes a privately held subsidiary of Elliott and will cease trading on the New York Stock Exchange.

Daunt’s honeymoon could be short-lived.

Barnes & Noble generated a $18.3 million net loss in its most-recent fiscal period, with same-store sales down 2.3%. Quarter sales topped $755 million and $3.6 billion for the fiscal year, down 3.9% and 3% from the prior year periods, respectively.

Barnes & Noble Narrows Q4 Loss, Posts Fiscal-Year Profit

Barnes & Noble, which has accepted a $683 million offer from a private equity fund manager, June 19 said it generated a fourth-quarter (ended April 27) loss of $18.3 million, down from a net loss of $21.1 million during the previous-year period.

The nation’s largest brick-and-mortar bookstore, which operates 627 stores in 50 states, said same-store sales dipped 2.3% in the quarter and 1.9% for the fiscal year.

Total quarterly sales were $755 million and $3.6 billion for the fiscal year, decreasing 3.9% and 3% from the prior year periods, respectively.

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quarterly sales, which include digital sales of movies and TV shows, narrowed 17.4% to $20.7 million from $25 million last year.

Fiscal 2019 net earnings were $3.8 million compared to a net loss of $125.5 million in the prior year.

Excluding non-recurring or unusual charges, pre-tax earnings topped $4.6 million in the quarter, as compared to $6.7 million a year ago, and $147.2 million for fiscal 2019, as compared to $145.4 million a year ago.

Barnes & Noble said it reduced expenses by $50.4 million during fiscal 2019, excluding non-recurring or unusual charges.

The retailer on June 7 entered into an agreement to be acquired by funds advised by Elliott Advisors (U.K.) Limited. If the deal is consummated, B&N is expected to be privately held.

 

 

Barnes & Noble Investor Wants More Money for Bookseller

An investor holding a 3.4% stake in Barnes & Noble is urging the bookseller’s board to consider more lucrative offers for the country’s largest brick-and-mortar bookstore.

The fiscally-challenged chain, which sells DVD/Blu-ray Disc movies, in addition to digital content through its Nook subsidiary, earlier this month accepted a $478.8 million offer ($683 million including debt) from private fund manager Elliott Management.

Book distributor Readerlink LLC then disclosed it was working on a superior bid.

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Richard Schottenfeld, who reportedly ranks among the chain’s top 10 investors, in a June 13 filing said he believes Barnes & Noble is worth “considerably more” than the agreed-upon sale price, and believe that the special committee, including its chairman, Mark Carlton, “has failed in its duty to maximize value for shareholders.”

Schottenfeld’s action could be too late.

Should B&N renege on the acquisition, it would owe Elliott a $4 million break-up fee. That amounts balloons to $17.5 million after June 13.

Report: Readerlink Eyeing Higher Offer for Barnes & Noble

Barnes & Noble has accepted an $683 million acquisition offer (including debt) from private equity firm Elliot Management.

Now that offer could be in question following a report Readerlink LLC, an Oak Brook, Ill.-based book distributor, is considering placing a superior counter offer for Barnes & Noble.

The Wall Street Journal, citing sources familiar with the situation, said a potential bid would exceed Elliott’s $6.50-per-share offer. Indeed, B&N shares closed June 10 at $6.80 per share on the news.

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Readerlink has until June 13 to submit a formal bid.

Should Barnes & Noble, which also sells digital movies through its Nook subsidiary, in addition to DVD/Blu-ray Disc titles in stores, strike another deal, it would be on the hook to Elliott for $4 million break-up fee – an amount that balloons to $17.5 million after June 13.

Barnes & Noble Being Acquired by Private Fund Manager for $683 Million

As expected, Barnes & Noble, the nation’s largest brick-and-mortar bookstore, June 7 disclosed it is being acquired by Elliott Management Corp. for $683 million, including debt.

The private fund manager, which acquired Britain’s largest bookstore Waterstone in 2018, will return Barnes & Noble to privately-held status, ending Wall Street scrutiny on a company that has lost more than $1 billion in market value in the past five years.

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Waterstone CEO James Daunt will manage Barnes & Noble operations as a separate entity.

Founded in 1965, Barnes & Noble, which includes the Nook tablet and digital media business, saw  a 1.1% increase in same-store winter holiday sales, its best fiscal result in three years. At the same time, the company had just $15 million in available cash.

The company, like a lot of traditional retailers, has struggled to compete with ecommerce, notably Amazon. Indeed, the online retail behemoth reportedly accounts for about 50% of all book sales, with Walmart at 4.2%.

The deal is expected to close by the third quarter.

 

 

Aggressive Marketing Drives Barnes & Noble’s Upbeat Winter Holiday Sales

Books can be a big seller if marketed correctly — especially during the winter holidays. Barnes & Noble apparently got the memo.

The national bookseller March 7 reported third-quarter (ended Jan. 26) net income of $66.9 million, marking a significant fiscal turnaround for the chain, which posted a loss of $63.5 million during the previous-year period. Revenue was flat at $1.23 billion.

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Meanwhile, the Nook segment, which includes electronic readers and tablets, in addition to digital content (movies, TV shows, music), saw revenue decline 22% to $24.3 million from $30.9 million last year. The operating loss increased 330% to $4.3 million from a loss of $1.3 million.

“In fiscal 2019, we have been focused on growing the top line, which contributed to our best holiday in years,” Len Riggio, founder and chairman, said in a statement. “Sales benefited from our new ad campaign, increased marketing and promotions, and an improved omni-channel experience for our customers. We believe these efforts are laying the foundation for sustained growth.”

 

 

 

 

Why Amazon Should Buy Barnes & Noble

When Amazon launched in 1994, founder Jeff Bezos envisioned his online bookseller competing against local stores and national chains such as Barnes Noble.

And for four years Amazon did just that: Sell books over the Internet more cheaply than anyone else – including Barnes & Noble, which remains one of the last-standing brick-and-mortar book (and packaged media) retailers.

Now Barnes & Noble is in financial trouble. It generated an operating loss of $26.7 million in the most-recent fiscal period. Revenue dipped 2% to $753.2 million.

The Nook segment – B&N’s attempt to compete with Amazon through a branded tablet device and digital (movies, TV shows, music) content – posted a $1.5 million operating loss. Revenue dropped nearly 17% to $21.7 million from $25.9 million last year.

The company hasn’t turned a fiscal profit in nearly two years. It is in litigation with its former CEO over inappropriate workplace behavior allegations and facing a make-or-break winter holiday period – at a time when sales should be booming.

As the retailer looks at “strategic” alternatives, including selling the company – Amazon, by comparison, is minting money.

Having long ago expanded beyond pulp fiction selling merchandise of every variety, in addition to Web services and retail grocery (Whole Foods), the company just posted its best-ever Cyber Monday, with customers ordering more than 180 million items through the five-day Thanksgiving weekend period.

Amazon ended the recent fiscal period with $56 billion in sales and profit approaching $3 billion.

Bezos is one of the richest, if not the wealthiest person on Earth. In 2013, he bought money-losing The Washington Post for $250 million – part vanity play and part attempt to support democracy.

Earlier this year the company became Mercedes-Benz’ largest single customer for the Sprinter van – a fleet order many speculate the company will use for local deliveries.

Acquiring Barnes & Noble would give Amazon 633 retail/distribution locations – many in prime mall locations.

The Amazon/Barnes & Noble store would have lots of cost synergies, including ramping up branded Amazon Go cashier-less convenience concept, showcasing the Amazon connected home (Kindle, Fire TV, Echo Dot, Ring doorbell, banking, etc.) – and selling books.

Founder Leonard Riggio Expresses Interest in Barnes & Noble Sale

Leonard Riggio, founder/chairman of Barnes & Noble, said he could take part in the ongoing sales process of national bookseller (and packaged-media retailer), according to a regulatory filing.

Barnes & Noble founder Leonard Riggio

Riggio, who owns 19.2% of B&N, launched his first bookstore in 1965, which later morphed into Barnes & Noble and currently employs 26,000 people at 630 stores across the country.

In October, Barnes & Noble announced that its board of directors had begun a formal review process to evaluate a possible sale of the company – a move supported by Riggio.

The 77-year-old executive said he is “evaluating,” and “may participate” in any potential sale of Barnes & Noble, including making, individually or with others, an offer to acquire the company and/or selling his stake in the retailer in connection with any transaction.

No sale of the company has been announced.

While in the midst of its busiest time of the year, Barnes & Noble remains embroiled in a nasty legal battle with terminated former CEO Demos Parneros for alleged inappropriate behavior in the workplace. The company also claims Parneros scuttled a possible sale of the company to a third party.

Barnes & Noble earlier this month reported a $1.5 million operating loss for its Nook business unit. Revenue dropped nearly 17% to $21.7 million from $25.9 million last year.

The Nook segment, which includes electronic readers and tablets, in addition to digital content (movies, TV shows, music), continues to a bright spot for the last-standing national bookstore chain, which continues to grapple with a changing consumer habits underscored by online entertainment and ecommerce.

Legacy retail sales – which include packaged media – generated an operating loss of $26.7 million. Revenue dipped 2% to $753.2 million.

 

 

Barnes & Noble Upbeat Entering Key Winter Retail Period

National bookseller Barnes & Noble Nov. 20 reported second-quarter (ended Oct. 27) operating loss of $1.5 million for its Nook business unit – down 48% from an operating loss of $2.9 million during the previous-year period. Revenue dropped nearly 17% to $21.7 million from $25.9 million last year.

The Nook segment, which includes electronic readers and tablets, in addition to digital content (movies, TV shows, music), continues to a bright spot for Barnes & Noble. The last-standing national bookstore chain continues to grapple with a changing consumer habits underscored by online entertainment and ecommerce.

Even better, legacy retail sales – which include packaged media – improved with operating loss of $26.7 million compared to an operating loss of $49.43 million last year. Revenue dipped about 2% to $753.2 million.

Chairman of the board Len Riggio, who took over control of the company following the firing of CEO Demos Parneros for alleged inappropriate behavior in the workplace, said the same-store sales decline of 1.4% was the best result since Q4 in 2016.

“While we cannot predict the outcome of the holiday, we are putting our full effort behind our holiday plans, including launching a new ad campaign,” Riggio said in a statement. “We expect this to lead to continued sales improvement during the holiday period.”

Barnes & Noble Reveals New Details for CEO Firing

Barnes & Noble has disclosed new details on its firing of CEO Demos Parneros in July after 16 months on the job.

The nationwide bookseller (and home entertainment retailer) in an Oct. 30 legal filing (Parneros v Barnes & Noble, 18-cv-7834, U.S. District Court, Southern District of New York), outlined further details of alleged sexual harassment by Parneros against a female employee, in addition to breach of fiduciary duty after allegedly scuttling a possible sale of the fiscally-challenged company.

Parneros, who maintains his innocence, sued Barnes & Noble in August for wrongful termination and payment of severance, claiming he was abruptly dismissed by the chain’s founder Leonard Riggio for no reason.

Barnes & Noble, in the filing, claims Parneros acted inappropriately with the female staffer he had called into his office, including pinching her neck after comparing heights.

“She also reported that just a few days after this incident, Parneros again called her into his office, inappropriately showed her pictures of what he considered to be romantic Quebec City hotels, told her that he ‘would have taken’ her to those hotels if he were her husband, pulled her towards him so that their faces touched cheek-to-cheek and, as she attempted to pull away, angrily told her that he thought she seemed like someone who ‘would put out’ if he ‘wined and dined’ her,” according to the complaint.

Barnes & Noble says it has received additional complaints about Perneros from other female employees.

In addition, the company alleged the former CEO made repeated negative comments about Barnes & Noble to an unnamed potential buyer, including questioning “Why did I come here?” to the buyer’s representative.

Parneros denies he tried to quash the transaction.

“These false allegations are nothing more than an effort to tarnish my reputation and punish me for seeking justice,” Parneros said in an email statement to Bloomberg.

Barnes & Noble in September reported a first-quarter (ended July 28) net loss of $17 million, up 70% from a net loss of $10.7 million during the previous-year period. Revenue dropped 7% to $794 million from $853 million last year.

The bookseller’s Nook business, which includes digital media such as TV shows and movies, narrowed its operating loss to $330,000 from an operating loss of $2.7 million last year. Revenue dropped 14% to $25.2 million from $29.5 million last year.