Barnes & Noble: A besieged giant - latimes.com
By Andrea Chang March 12, 2010
The world's largest bookseller faces an unwelcome stock fight while trying to deal with radical market shifts.
Although Barnes & Noble faces few rivals in the brick-and-mortar bookstore business, analysts say consumers today have more book-buying avenues than ever, with online sellers, general merchandisers, discounters and wholesale clubs offering growing selections at low prices. The company was also late to enter the digital e-reader realm with its Nook device, which now must play catch-up to Amazon.com Inc.'s Kindle.
"Whether it's television, Internet, Wal-Mart, Amazon or an e-reader, there's always, it seems, a new attack on traditional book reading and buying in bookstores," said David Schick, an analyst at Stifel, Nicolaus & Co. "It's just one thing after another."...
...[the] fundamental shift in reading and book-buying habits has some analysts doubtful that an increased Burkle presence would mean a turnaround for the company.
"Barnes & Noble is swimming against a very strong current," said Matthew Fassler, managing director at Goldman Sachs. "I'm not sure what his, or anyone else's, gaining additional control would remedy for the business. I think that the essence of the problem is a bit beyond management's control."
Although Burkle has not spelled out his broader strategy for Barnes & Noble and declined to comment, industry watchers speculate that his intention is to buy big and reap the rewards when the company's outlook improves, especially if there are further closures and consolidation in the bookstore industry. Barnes & Noble operates 719 stores in 50 states as well as college bookstores and online and publishing divisions.
Burkle's strategy is "when the assets are in the down part of a cycle, to get involved," said BB&T Capital Markets analyst Andrew Wolf. "He invests and then gets out."
Indeed, Burkle has said that his general philosophy is to buy reputable-but-troubled companies for cheap. Some of his best-known deals involved supermarket chains Ralphs and Food4Less....
...Despite Burkle's criticism of company management, Barnes & Noble executives defended the company's business model and said the rise of e-readers doesn't preclude the success of traditional bookstores.
"Physical books and bookstores will continue to be a very important part of this big industry," said William Lynch, president of Barnes & Noble.com. "Anyone that says the physical book business is going away is just not paying attention or just doesn't know much about the industry."