Barnes & Noble Founder Riggio Hopes To Buy Back Business
Leonard Riggio founded Barnes & Noble in the 1970s and helped the book seller expand its “big box” presence, now the chairman and largest shareholder—with his 30 percent stake in the company—wants to buy the company’s retail business. In a Feb. 25 regulatory filing, Riggio disclosed that he hopes to acquire the company’s retail stores and Web site, while splitting off the Nook e-reader and college book stores. No price has been disclosed at this time, but according to the SEC filing, Riggio plans to negotiate a price with the Barnes & Noble board and pay with cash and debt.
New York-based Barnes & Noble has been struggling to survive in the retail arena amidst discount stores and online competitors, and in an era when more readers have made the move to electronic books. While the company invested in its Nook e-book readers, the device faces heavy competition from gadgets such as the Apple iPad Mini, Amazon Kindle and Google Nexus tablet. In fact, the company announced earlier this month its Nook revenue will likely be less than $3 billion—a loss for the unit. A January report from the company stated holiday revenue for the Nook unit fell 12.6 percent to just $311 million, and bookstore and Web sales fell 10.9 percent during the period compared to a year ago. Barnes & Noble’s third-quarter results are expected Feb. 28.
Morningstar analyst Peter Wahlstrom told the Associated Press the deal makes sense since the retail side of the business has been overshadowed by investments needed to support the Nook.
“The retail business for Barnes & Noble is mature-slash-declining, but it’s profitable,” he said. “The company has done a good job executing amid a pretty challenging environment.
“Riggio feels like he can run it better than just about anyone else, and with four decades of operating history there’s not much reason to believe that he can’t.”
Shares in Barnes & Noble rose almost 13 percent by afternoon trading following the announcement.
[Image via SeanPavonePhoto/Shutterstock]
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