Barnes & Noble is having a Tuesday it would rather forget. On the heels of another disappointing earnings report for the bookseller, Barnes & Noble's chairman and largest investor is ending his bid to buy up the company's bookstores.
Another bleak earnings report and an aborted buyout bid are casting further doubt on Barnes & Noble’s future.
The bookseller’s chairman and chief shareholder, Leonard Riggio, has backed away from earlier interest in buying up the company’s bookstores. Mr. Riggio announced in February that he was preparing a bid to take Barnes & Noble’s 675 bookstores private. But in a Tuesday filing with the Securities and Exchange Commission, he changed his mind.
“While I reserve the right to pursue an offer in the future, I believe it is in the company’s best interests to focus on the business at hand,” Riggio said of his decision in a statement.
Riggio’s disclosure came on the heels of yet another deflating earnings report for Barnes & Noble. The company’s fiscal 2014 first quarter financial results reported a $87 million loss last quarter, doubling its losses from a year ago. Sales fell 8.5 percent, and revenue tied to the struggling Nook e-reader division, now a separate arm of the company, dipped 20 percent. Sales of Nook devices and software dropped 23.1 percent
The Nook has been a giant source of concern for Barnes & Noble, and for the moment, the company appears to be stuck with it. The company split the Nook business into a separate company from its bookstores in January 2012, and the Nook has been up for sale since. It has yet to find a buyer.
Barnes & Noble’s traditional retail business didn’t fare well either, with revenue dropping 9.9 percent. And a few wildly successful book franchises from last year could be to blame: The company told Bloomberg that nearly half of its sales drop could be attributed to a slowdown after the frenzied demand for Suzanne Collins’ “The Hunger Games” trilogy and E.L. James’ “50 Shades of Grey” trilogy last year. Other booksellers are feeling the post-2012 letdown as well: The Association of American Publishers reported a 4.7 percent revenue loss for trade books in the first quarter of 2013, mostly in the “Hunger Games”-driven young adult category.
But Barnes & Noble has had deeper troubles than the young adult market. The company lost 118.6 million during 2013’s fiscal fourth quarter (the last report before Tuesday’s), with a 34 percent plunge from Nook leading the way. Former CEO William Lynch resigned last month after the Nook business reported a $475 million operating loss for the fiscal year ending in April. On Tuesday's news, company shares plunged 16 percent in midday trading.