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