Barnes & Noble Is Sold to Hedge Fund After a Tumultuous Year

[Rogue Valley]

Barnes & Noble Is Sold to Hedge Fund After a Tumultuous Year

Barnes & Noble’s future had been the subject of speculation for months.

6/7/19
Barnes & Noble has been acquired by the hedge fund Elliott Advisors for $638 million, a move that has momentarily calmed fears among publishers and agents that the largest bookstore chain in the United States might collapse after one of the most tumultuous periods in its history. The sale was announced Friday morning after months of speculation over the future of Barnes & Noble. The acquisition follows Elliott’s purchase of the British bookstore chain Waterstones in June 2018. James Daunt, the chief executive of Waterstones, will also act as Barnes & Noble’s C.E.O. and will be based in New York. It marks a surprising new chapter in the 40-plus-year history of Barnes & Noble, which evolved from a single Manhattan bookstore in 1971 and grew into a national fleet of superstores. But in recent years, Barnes & Noble has been decimated by the strength of online booksellers like Amazon and struggled to make a profit. The company has closed more than 150 stores in the last decade or so, leaving it with 627.

“Somebody else had to save Barnes & Noble — the present ownership succeeded in a completely different environment and was not ready to jump into the 21st century,” he said. “The fact that they own Waterstones certainly puts them in the right direction. Their ability to influence the publishing industry is going to be stronger being in both markets.” Waterstones has pursued a strategy that some analysts say is the only way to compete in a marketplace dominated by online sales, by allowing individual Waterstones booksellers to tailor each store to the needs and interests of its community. Mr. Daunt, who took over in 2011, has said Waterstones operates more like a constellation of independent stores than a homogeneous chain. In recent years, there have been encouraging signs that the print retail business is rebounding, and publishers hope that a revitalized Barnes & Noble could take advantage of that shift. Independent bookstores are thriving again, and print sales are rising while e-book sales are declining. Even Amazon is investing in physical bookstores across the country.

Similar to how Walmart employed the big box discount concept and devastated smaller retainers, Amazon.com has decimated the brick and mortar retail book chains.

Wishing Barnes and Noble all success going forward.

 

[Chomsky]

As someone who loves books and bookstores, I am saddened by this. But we're all guilty of the demise of the bookstores - each and everyone of us (I suspect).

 

[Rexedgar]

Remember Borders? We have a few used book stores in the area; they will be the only option soon and they have internet competition.

 

[Rexedgar]

As someone who loves books and bookstores, I am saddened by this. But we're all guilty of the demise of the bookstores - each and everyone of us (I suspect).

...not just bookstores!

 

[Rogue Valley]

Similar to how Walmart employed the big box discount concept and devastated smaller retainers

Darn auto spell checker .... retailers

 

[Oozlefinch]

Similar to how Walmart employed the big box discount concept and devastated smaller retainers, Amazon.com has decimated the brick and mortar retail book chains.

Wishing Barnes and Noble all success going forward.

Actually, that has actually had a rather small impact, and many are rethinking that paradigm and questioning it's accuracy.

The era of the "Big Box" also happened at the same time as e-commerce. Walmart opened it's first store in California in 1990, a few years after earlier attempts of "Big Box" stores came and went. And those old 1990 era stores were typical of the era. 30-40,000 square feet, concentrating in smaller towns without nearby malls.

Anybody who studies retail in the US can see multiple waves of change, all starting in the mid-1990s. Malls started to die out, big box stores started to take hold, and at the same time in the background e-commerce started.

Now this was largely ignored, because in the first decade e-commerce was spotty, largely handled specialty goods, and had a few spectacular crashes. The crash of 2000-2001 was spectacular.

But I saw more and more by 2003 that people were starting to move more and more to buying things on-line, and less from local retailers. This is what has really been killing the local businesses, not big box. I saw it myself last year when my own computer store closed. It was not Walmart that killed me, it was that people can shop at home and get a computer delivered in 2-3 days. Never mind that it was the same price or a fraction more than what I sold one for, they never had to leave the house.

You can really see this in book stores and used book stores. A staple in most communities for over 100 years, more and more are closing every year. Hell, entire chains of book stores have been closed in the last decade. They certainly are not being shut down by Walmart. The same with used record stores. Once again, Walmart is not their competition. At most even the largest Supercenter might have 200 titles at most in the book area, and maybe 1,000 CDs.

Nope, these are all being closed by Amazon and companies like it. And other factors are the increase of rent in urban areas. Traditional brick and mortar stores have much higher operating expenses than an e-store that can literally be anywhere.

We have seen this shift even in Walmart. Where increasingly "shop at home", free store delivery and even custom shoppers getting everything you need then delivering it to your car is more and more becoming the standard.

People have long blamed the Big Box concept unfairly I thought. Ultimately, I think it is largely going to be a blip on the history of retail. I saw it tried in the 1980's and failed. It came back in the 1990's, and seemed to survive for a while. But we are seeing more and more companies that tried that approach failing now (Tower Records, Border's, Toys R Us, Circuit City, etc, etc, etc). They all over a period of a decade or so migrated from conventional store to big box store, and eventually got eaten. Walmart is actually returning to their own roots, with their Neighborhood Market chain, and starting to use their own store more and more as e-commerce pick-up sites.

Still a place you can go to get the newest Xbox game and a case of soda. But now where you can custom order that 60" TV you wanted and a case of toilet paper and pick it up in 2 days as well.

 

[ChezC3]

I appreciate B&N for the calming effect it has on me when I go in to browse. Which is the effect on me in all book stores...

Unfortunately for them, Half Price Books and Amazon are the only two places I'll actually buy books. B&N is just too expensive.

I will pick up a few periodicals now and then from them though...

 

[Oozlefinch]

And interestingly enough, I have predicted for years that conventional brick and mortar stores are going to have even more pressure from digital and online retailers in the future.

First we saw it in the music industry, as Napster and the following music services put stress on the traditional record store. Tower Records, Camelot Music, Virgin Megastores, Musicland, Sam Goody, all and more are now gone. Casualties of the Internet.

And as speeds increased, the home movie industry was next. Movie Gallery, Blockbuster, West Coast Video, Hollywood Video, that industry has already collapsed. High Speed Internet now making the streaming of movies in real time easier than buying or renting physical copies of movies.

And we are seeing the same thing happen at this time when it comes to games.

Back in 1985, B. Dalton (1966-2013) spawned Software Etc as a specialty store that sold computer books, magazines, and software. And in 1994 it absorbed Babbages, a competing chain. But a decade of bad sales and losses saw the company sold over and over again, at one point passing from B. Dalton to NeoStar before being passed to Barnes & Noble (which by then had purchased B. Dalton). Eventually by 1999 Software Etc started to close their doors, but interestingly enough part of the store continued.

Just as Radio Shack started as an in-store specialty shop of Tandy Leather (and outlived the parent company), the in-store section of Software Etc dedicated to games took over.

And now that games are most commonly downloaded over the internet instead of from physical copies, the software store is becoming part of history.

I saw that coming 8 years ago, when I realized the software section of stores like Best Buy and Fry's was getting smaller and smaller. I give GameStop at most 3-5 years, and it too will follow Blockbuster unless they are able to radically change their business model. They are trying, starting to concentrate now more on collectables and non-video game items. But I think ultimately it is to little, to late.

 

[Lord Tammerlain]

And interestingly enough, I have predicted for years that conventional brick and mortar stores are going to have even more pressure from digital and online retailers in the future.

First we saw it in the music industry, as Napster and the following music services put stress on the traditional record store. Tower Records, Camelot Music, Virgin Megastores, Musicland, Sam Goody, all and more are now gone. Casualties of the Internet.

And as speeds increased, the home movie industry was next. Movie Gallery, Blockbuster, West Coast Video, Hollywood Video, that industry has already collapsed. High Speed Internet now making the streaming of movies in real time easier than buying or renting physical copies of movies.

And we are seeing the same thing happen at this time when it comes to games.

Back in 1985, B. Dalton (1966-2013) spawned Software Etc as a specialty store that sold computer books, magazines, and software. And in 1994 it absorbed Babbages, a competing chain. But a decade of bad sales and losses saw the company sold over and over again, at one point passing from B. Dalton to NeoStar before being passed to Barnes & Noble (which by then had purchased B. Dalton). Eventually by 1999 Software Etc started to close their doors, but interestingly enough part of the store continued.

Just as Radio Shack started as an in-store specialty shop of Tandy Leather (and outlived the parent company), the in-store section of Software Etc dedicated to games took over.

And now that games are most commonly downloaded over the internet instead of from physical copies, the software store is becoming part of history.

I saw that coming 8 years ago, when I realized the software section of stores like Best Buy and Fry's was getting smaller and smaller. I give GameStop at most 3-5 years, and it too will follow Blockbuster unless they are able to radically change their business model. They are trying, starting to concentrate now more on collectables and non-video game items. But I think ultimately it is to little, to late.

GameSpots Canadian operations EB Games from the stores I have been in are doing quite well. They have approx half the store dedicated to game collectables and video game related toys. Of course the ones I have been in are located in malls, and likely get a lot of traffic generated from impulse buys. The stand alone stores I doubt are doing as well.

 

[Oozlefinch]

GameSpots Canadian operations EB Games from the stores I have been in are doing quite well. They have approx half the store dedicated to game collectables and video game related toys. Of course the ones I have been in are located in malls, and likely get a lot of traffic generated from impulse buys. The stand alone stores I doubt are doing as well.

I am sure that a lot of that has to do with climate.

In the US, malls have been dying for over 20 years. More and more of them are collapsing, and it is not unusual to see malls that are barely at 1/2 occupancy.

But in Canada with the harsher weather, I am sure that that is not so much of an issue. Where as most of the US only has to deal with occasional rain to stop a shopper from walking or driving from store to store, it is more of a challenge walking through 3'+ of snow.

And while collectables are part of the new GS model, I wonder how sustainable that is.

I think the only real way they can survive is to largely end their brick and mortar operations and migrate primarily to dealing in used games and systems. But because of their poor price policies in the past I do not see that ever happening. On average they tend to buy games for 10-25% less than even decades established companies like Game Dude, they sell used games for 10%+ higher. That has pretty much turned a large segment of the game community against them.

 

[OldFatGuy]

Just as Radio Shack started as an in-store specialty shop of Tandy Leather (and outlived the parent company)

A small correction. Radio Shack was founded as a separate company in 1921, competed with RCA, Heathkit, Lafayette, Allied and other electronic component stores for those who built their own radios and speakers, CB and scanners, repair parts and so on. It was purchased by Meribee Arts in 1945. In 1972 after Meribee went bankrupt, RS was purchased by Tandy Leather Factory for $350k, maintained as a wholly owned subsidiary. Tandy had been founded separately in 1919.

Since 2017 General Wireless Operations, Inc. which purchased RS out of bankruptcy, has kept the business open as a supplier to other electronics companies for parts and tools, strictly on line sales. The last franchised store was closed in early 2018. The company is designing and intends to sell, a kit for home audio enthusiasts who want to build their own custom analog tube audio equipment.

Tandy Leather Factory is still in business with 127 retail stores in 5 countries (the US, Canada, Australia, Mexico and Brazil) and is in the midst of a web site build. It is still in the hands of the founding family. It sells many goods for craft hobbies beyond leathers and leather working tools, with the greatest selection of beads in the world. And including rare woods, parts, materials and tools for independent luthiers.

Tandy Computing, a separate partnership with Texas Instruments, is also still in business, designing and building specialized computers for vehicles and running factory equipment, robotics for industry.

 

[Oozlefinch]

In 1972 after Meribee went bankrupt, RS was purchased by Tandy Leather Factory for $350k, maintained as a wholly owned subsidiary. Tandy had been founded separately in 1919.

Tandy Leather Factory is still in business with 127 retail stores in 5 countries (the US, Canada, Australia, Mexico and Brazil) and is in the midst of a web site build. It is still in the hands of the founding family. It sells many goods for craft hobbies beyond leathers and leather working tools, with the greatest selection of beads in the world. And including rare woods, parts, materials and tools for independent luthiers.

Noted.

But the acquisition was a decade earlier in 1962, not 1972. And by the late 1970's the Tandy chain peaked at just over 300 stores (compared to 108 today).

Founded 94 years ago by Theodore and Milton Deutschmann in a storefront in Boston, RadioShack rose to glory with the mass adoption of the radio and the rise of electronics. In 1962, the company was acquired by Tandy Corporation, a New York Stock Exchange-listed Texas-based leather goods firm that was seeking to diversify and in 2000, the company changed its ticker to 'RSH'.

RadioShack Cuts The Cord After 94 Years, Files For Bankruptcy

At it's peak in 1999, Radio Shack had 7,186 stores.

I admit, my knowledge of the company started in around 1968, when my mother was the manager of a Tandy store in Reseda. The back half of the store was converted to a Radio Shack, just before she finished her first computer classes and went from retail to programming. When we moved from LA in 1975 it was still in that configuration, half Tandy Leather and half Radio Shack (primarily at that point electronic components).

When I moved back in 1981, it was entirely Radio Shack.

And I actually had to look up the year, I was only 4 and barely remember it. But I remember that my first radio was a kit that my mom had built right before she left the company. She had assembled it and had it on display with photos of her doing it, to show how even a complete novice could assemble one of their kits. And that was 1968 (the year they started the Science Fair line of kits), I knew it was not 1969 because she was already working at another company by the time of Apollo 11.

And yea, there are still some Tandy stores left, but nowhere near as many as there used to be. I remember when they used to be a common sight in the LA area, but I can only think of one left (North Hollywood).

 

[OldFatGuy]

Noted.

Thing is, they are both still in business, not what they were, but in business. My first was a simple Heathkit crystal radio, later a Dynakit amp and pre-amp. Both still drive a pair of Wharfdale designed bookshelf speakers assemble with parts from Lafayette in Maple boxes and a lot of glue, and an old NAD FM tuner in my studio office, permanently set to WFUV. Sounds good in a former walkin closet.

 

[swing_voter]

Most cities still have at least one independent book store. I like independents better than Barnes and Nobel. Barnes and Nobel always seemed kind of fake.

 

[PoS]

B&N sort of shot themselves in the foot when they lagged behind Amazon in setting up an online marketplace and e-reader. They continued with the brick and mortar stuff and traditional print books, and lost out a lot to the surge of new independent authors.

I get some sales from B&N, but since their market is totally focused on the US, I have to use an aggregator just to get my books listed on their site.