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Bloomberg's Townsend on BKS: CEO Ouster, Company Outlook(Audio) · Bloomberg Intelligence

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  Speaker 1: business flash. You're listening to Taking stock with Kathleen Hayes
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  Speaker 1: and Pim Fox on Bloomberg Radio. Another chapter for Barnes
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  Speaker 1: and Noble. Well, it's beginning with a stock decline of
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  Speaker 1: nearly twelve percent to day after its CEO, Ron War
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  Speaker 1: was ousted. Apparently he's not the right person to revample
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  Speaker 1: bookstore chain obviously struggling to compete with Amazon and other
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  Speaker 1: online sellers. For anybody, though, who likes going into those
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  Speaker 1: big Barnes and Nobles and then in a cup of
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  Speaker 1: coffee looking at books. This is kind of a dark cloud.
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  Speaker 1: Matt Townsend is here retail reporter for Bloomberg News, and
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  Speaker 1: he's been taking a look at this today. So you know,
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  Speaker 1: the CEO Austre is one thing, and then these there's
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  Speaker 1: these big forces that are pushing against Barnes and Noble.
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  Speaker 1: But let's start with the CEO. What happened, Well, he
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  Speaker 1: was there barely over a year, and you know, when
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  Speaker 1: he was hired, he was seen as a guy who
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  Speaker 1: had a ton of experienced retail He worked for Toys
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  Speaker 1: r US, Best Buy, UM, and his big idea was,
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  Speaker 1: you know, books much very competitive market. So we're gonna
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  Speaker 1: put more non book things in Barnes and Noble, more toys,
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  Speaker 1: more accessories, gifts. UM. They recently announced that they were
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  Speaker 1: gonna start testing putting beer and wine in their store,
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  Speaker 1: which for a lot of people made a lot of
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  Speaker 1: sense because that goes well with reading books and their
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  Speaker 1: cafes and things like that. UM. So we don't really
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  Speaker 1: know behind the scenes why he was actually asked to.
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  Speaker 1: The results have been mixed. UM. You know, it's not
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  Speaker 1: drastic declines right now in the business, they've kind of stabilized. Um.
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  Speaker 1: But at the end of the day, this is still
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  Speaker 1: Len Riggio's company. He founded it over fifty years ago.
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  Speaker 1: He's still the chairman. He was set to retire in September,
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  Speaker 1: kind of walk away and just be a board member.
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  Speaker 1: No longer chairman. He is now staying, going to find
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  Speaker 1: a new CEO and run the company while they look
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  Speaker 1: for the next CEO. Is this really a bookstore company
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  Speaker 1: or is this a real estate business that happens to
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  Speaker 1: sell books and whatever else they can sell in those
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  Speaker 1: large square foot print you know, I mean it's it's
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  Speaker 1: it's definitely shifting away from a bookstore that they have
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  Speaker 1: to and that's they're deversifying. As far as the real
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  Speaker 1: estate of me, I believe most of their stores are
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  Speaker 1: just leased. UM. So it's not that they own a
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  Speaker 1: bunch of real estate that's worth a lot of money.
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  Speaker 1: They gonna let the releases roll off. That's what they've
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  Speaker 1: into doing. That's what they've been doing. They've been UM.
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  Speaker 1: When at least comes up, they either get out of
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  Speaker 1: it or they renegotiate it. UM. But I will say,
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  Speaker 1: you know one thing, going for Barnes and Noble is
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  Speaker 1: that the publishing industry does not want to see Barnes
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  Speaker 1: and Noble go away because then they'd be left with
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  Speaker 1: dling with just Amazon, which is not a good thing
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  Speaker 1: for them having the publishers. So the publishers will probably
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  Speaker 1: and then mall owners like Barnes and Noble too, because
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  Speaker 1: it draws a lot of foot traffic, even if no
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  Speaker 1: people aren't always buying books when they go in the stores.
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  Speaker 1: So are reasons why Barnes and Noble probably has a
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  Speaker 1: much longer life than maybe some other retailers because publishers,
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  Speaker 1: publishers want to keep them in business, and the malls
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  Speaker 1: way I like them. Okay, Bloomberg News, your team reporting
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  Speaker 1: that you're you're reminding us that Amazon's testing physical bookstores
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  Speaker 1: could ultimately open hundreds of them. So obviously, if Amazon
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  Speaker 1: is thinking of doing this, it's not like there's something
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  Speaker 1: just totally oh you're there's there's no reason to be
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  Speaker 1: a brick and mortar bookstore, and Barnes and Noble has
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  Speaker 1: the brand Barnes and Noble's. Um. What Amazon does with
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  Speaker 1: a physical location would probably incorporate, you know, places to
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  Speaker 1: a place to pick up your packages and stuff like that,
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  Speaker 1: so it would be, you know, it's branding, it's they
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  Speaker 1: could sell all their you know, their their their tablets
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  Speaker 1: and things like that. But that's true. I mean, you know,
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  Speaker 1: the books have taken away some of the market share
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  Speaker 1: for physical books, but the books have kind of plateau there.
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  Speaker 1: They're the market roughly, so people are still reading a
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  Speaker 1: lot of physical books. Um. I mean, one really strong
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  Speaker 1: part of the book market that hasn't been taken over
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  Speaker 1: at all by the books is children's books, for example,
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  Speaker 1: and Barnes and Noble even before Ron Barr got there,
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  Speaker 1: I had made a push to put more children's books
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  Speaker 1: in their stores, may put more places for kids to read,
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  Speaker 1: kind of like a sort of pseudo library. The stock
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  Speaker 1: is down more than right right when I took a
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  Speaker 1: look at the the release the earnings released, you're talking
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  Speaker 1: about a retail sales decline of more than two percent.
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  Speaker 1: You look at the nook sales division that's down. At
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  Speaker 1: what point does this become a business that is just
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  Speaker 1: about saving the jobs of the twenty eight thousand people
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  Speaker 1: that work there rather than about growing the business. Can
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  Speaker 1: this go on? And definitely, I mean that that's basically
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  Speaker 1: the conundrum with every brick and water sort of traditional
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  Speaker 1: retailer out there, it's how do you manage a slow decline.
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  Speaker 1: There's a lot of growth out there for any retailer
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  Speaker 1: that has fiscal stores nationwide. So with Barnes and Noble, yeah,
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  Speaker 1: that is you're managing to decline. Um. You know, they
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  Speaker 1: made this big push into digital books with the Nook
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  Speaker 1: and had these Nook tablets and for a while they
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  Speaker 1: were okay and did pretty well, but eventually they got
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  Speaker 1: crushed by Amazon and iPads and everything else. So it's
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  Speaker 1: much diminished business as far as that. But yes, no,
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  Speaker 1: I think a big part of this is how do
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  Speaker 1: you manage a declining business and how do you sort
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  Speaker 1: of stabilize it getting back to a growth business. I
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  Speaker 1: mean that seems out of the question. Of course, part
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  Speaker 1: of the backdrop has been in some weak retail segments.
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  Speaker 1: It's not just Barnes and Noble when you look at
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  Speaker 1: the consumer but quickly, uh analysts of what are they
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  Speaker 1: saying about barn Is there anybody out there saying, oh,
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  Speaker 1: it's beaten up by it? Um? I haven't seen that,
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  Speaker 1: but you know, if the stock is every and when
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  Speaker 1: the soccer is selling them when someone's buying it obviously.
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  Speaker 1: So UM, you know it's it's still has positive cash flow,
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  Speaker 1: it's still is profitable. Um, it doesn't have a lot
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  Speaker 1: of debt to deal with. Its pretty good shape, all right,
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  Speaker 1: Matt Townsend, thank you very much for joining us. He's
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  Speaker 1: a retail reporter for a Bloomberg giving us the lowdown
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  Speaker 1: on Barnes and Noble and the shares down more than
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  Speaker 1: eleven percent. This is Bloomberg. Yeah. Miss. Olympic up Day
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