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Barnes & Noble Plans to Close down One Third of Its Bookstores in Next Decade (BKS)

Monday, January 28, 2013 8:26 AM
Barnes & Noble IncAccording to the Wall Street Journal, a top executive from Barnes & Noble Inc. (NYSE: BKS) has said that the book seller will shutter a third of its retail stores in the next decade. Mitchell Klipper, the Chief Executive of Barnes & Noble while speaking to the Journal gave a very detailed outline on what the Company intends to do with its numbers of bookstores. “In 10 years we'll have 450 to 500 stores,” said Klipper, adding that the forecast assumes close down of 20 stores annually in next 10 years, according to the WSJ. As of January 23, 2013, Barnes & Noble operated 689 retail stores and 674 college bookstores across the States. While the bookstores chain has been shuttering nearly 15 stores annually since last decade, it has also opened 30 or more stores simultaneously until 2009. However, in the recent past, the opening of new stores has mainly withered as more and more readers switch towards digital devices or ‘e- books’ such as Barnes & Noble’s Nook, Amazaon.com’s (NASDAQ: AMZN) Kindle and Apple Inc.’s (NASDAQ: AAPL) iPad. Thus far, Barnes & Noble opened only two new stores in the current fiscal year. Klipper believes that distribution network with 450 to 500 bookstores is a good “business model”, adding that company needs to keep a check on overheads and “get smart with smart systems”. The move comes at a time when investors and analysts have started doubting Barnes & Noble’s future. Just last month, the company reported an 11% decline in sales during the key holiday-season period. Same-store-sales, a key gauge on any retail chain’s performance, also slumped 3.1% in the same period. Barnes & Noble’s market share in the print book business first eroded due to intensifying competition from discount book seller, Amazon.com. Later the proliferation of e-books usage further dented print-book sales. A data provided by market research firm Nielsen BookScan showed that unit sales of print book in the U.S. market plunged 9% last year while they have plummeted 22% from 2007. Now, adding to the Company’s woes is intensifying competition in the e-books business. With large number of players already present in this field such as Apple Inc, Amazon.com, Samsung Electronics and Google Inc. (NASDAQ: GOOG), the margins and sales have taken a beating. In the just concluded holiday season quarter, Barnes & Noble reported that online as well as stores sales for Nook dropped compared to the same period of last year.
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