Barnes & Noble chairman halts plan to buy stores as sales slide

Tue Aug 20, 2013 3:31pm EDT
 
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By Jessica Wohl and Phil Wahba

(Reuters) - Barnes & Noble Inc's founder and largest shareholder on Tuesday suspended his plan to buy the bookseller's stores, dashing investor hopes for a deal as the company again reported poor quarterly results.

B&N shares fell 15 percent to $14.17, their lowest level since February, when Leonard Riggio, who is also chairman, said he planned to make an offer for B&N's retail business.

News of Riggio's change of heart came as the company reported a 10 percent decline in sales at its bookstores and bn.com website for the latest quarter, hurt by a drop in sales of Nook e-readers and tablets at its stores and the absence of a mega-bestseller like the "Fifty Shades of Grey" trilogy that boosted business last year.

A deal would have resulted in splitting stores off from B&N's Nook and college bookstore businesses.

Now, investors who were waiting for a deal are moving on.

"Right now, the issue is you've got a lot of short-term deal investors in the stock and there's no deal," said Maxim Group analyst John Tinker. Investors will now focus on business fundamentals instead, he said.

And those were weak - comparable sales fell at its college bookstore chain in the latest quarter, while the Nook unit's revenue fell 20 percent and Barnes & Noble's share of the U.S. ebooks market slipped.

Despite another quarter of losses, the company said its cash position was sound and its $1 billion credit facility nearly untouched. Its stores generate a lot of cash and are still very profitable.   Continued...

 
People walk past the Barnes and Noble bookstore on the corner of Warren and Greenwich street in New York June 29, 2010. REUTERS/Lily Bowers