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Speaker 1: afternoon call. Here he is one and only Bill Maloney.
Speaker 1: A good afternoon, Charlie Maybeways averages are quiet today, with
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Speaker 1: Breaking News desk on Bill Maloney, Charlotte, all right, thank
Speaker 1: you very much, Bill Maloney, and to hear live breaking
Speaker 1: news over your bloombread tip squawk squ a w K
Speaker 1: on your terminal. I'm Charlie Pellett. That's a bloom Bread
Speaker 1: business flash. You're listening to Taking stock with Kathleen Hayes
Speaker 1: and Pim Fox on Bloomberg Radio. Another chapter for Barnes
Speaker 1: and Noble. Well, it's beginning with a stock decline of
Speaker 1: nearly twelve percent to day after its CEO, Ron War
Speaker 1: was ousted. Apparently he's not the right person to revample
Speaker 1: bookstore chain obviously struggling to compete with Amazon and other
Speaker 1: online sellers. For anybody, though, who likes going into those
Speaker 1: big Barnes and Nobles and then in a cup of
Speaker 1: coffee looking at books. This is kind of a dark cloud.
Speaker 1: Matt Townsend is here retail reporter for Bloomberg News, and
Speaker 1: he's been taking a look at this today. So you know,
Speaker 1: the CEO Austre is one thing, and then these there's
Speaker 1: these big forces that are pushing against Barnes and Noble.
Speaker 1: But let's start with the CEO. What happened, Well, he
Speaker 1: was there barely over a year, and you know, when
Speaker 1: he was hired, he was seen as a guy who
Speaker 1: had a ton of experienced retail He worked for Toys
Speaker 1: r US, Best Buy, UM, and his big idea was,
Speaker 1: you know, books much very competitive market. So we're gonna
Speaker 1: put more non book things in Barnes and Noble, more toys,
Speaker 1: more accessories, gifts. UM. They recently announced that they were
Speaker 1: gonna start testing putting beer and wine in their store,
Speaker 1: which for a lot of people made a lot of
Speaker 1: sense because that goes well with reading books and their
Speaker 1: cafes and things like that. UM. So we don't really
Speaker 1: know behind the scenes why he was actually asked to.
Speaker 1: The results have been mixed. UM. You know, it's not
Speaker 1: drastic declines right now in the business, they've kind of stabilized. Um.
Speaker 1: But at the end of the day, this is still
Speaker 1: Len Riggio's company. He founded it over fifty years ago.
Speaker 1: He's still the chairman. He was set to retire in September,
Speaker 1: kind of walk away and just be a board member.
Speaker 1: No longer chairman. He is now staying, going to find
Speaker 1: a new CEO and run the company while they look
Speaker 1: for the next CEO. Is this really a bookstore company
Speaker 1: or is this a real estate business that happens to
Speaker 1: sell books and whatever else they can sell in those
Speaker 1: large square foot print you know, I mean it's it's
Speaker 1: it's definitely shifting away from a bookstore that they have
Speaker 1: to and that's they're deversifying. As far as the real
Speaker 1: estate of me, I believe most of their stores are
Speaker 1: just leased. UM. So it's not that they own a
Speaker 1: bunch of real estate that's worth a lot of money.
Speaker 1: They gonna let the releases roll off. That's what they've
Speaker 1: into doing. That's what they've been doing. They've been UM.
Speaker 1: When at least comes up, they either get out of
Speaker 1: it or they renegotiate it. UM. But I will say,
Speaker 1: you know one thing, going for Barnes and Noble is
Speaker 1: that the publishing industry does not want to see Barnes
Speaker 1: and Noble go away because then they'd be left with
Speaker 1: dling with just Amazon, which is not a good thing
Speaker 1: for them having the publishers. So the publishers will probably
Speaker 1: and then mall owners like Barnes and Noble too, because
Speaker 1: it draws a lot of foot traffic, even if no
Speaker 1: people aren't always buying books when they go in the stores.
Speaker 1: So are reasons why Barnes and Noble probably has a
Speaker 1: much longer life than maybe some other retailers because publishers,
Speaker 1: publishers want to keep them in business, and the malls
Speaker 1: way I like them. Okay, Bloomberg News, your team reporting
Speaker 1: that you're you're reminding us that Amazon's testing physical bookstores
Speaker 1: could ultimately open hundreds of them. So obviously, if Amazon
Speaker 1: is thinking of doing this, it's not like there's something
Speaker 1: just totally oh you're there's there's no reason to be
Speaker 1: a brick and mortar bookstore, and Barnes and Noble has
Speaker 1: the brand Barnes and Noble's. Um. What Amazon does with
Speaker 1: a physical location would probably incorporate, you know, places to
Speaker 1: a place to pick up your packages and stuff like that,
Speaker 1: so it would be, you know, it's branding, it's they
Speaker 1: could sell all their you know, their their their tablets
Speaker 1: and things like that. But that's true. I mean, you know,
Speaker 1: the books have taken away some of the market share
Speaker 1: for physical books, but the books have kind of plateau there.
Speaker 1: They're the market roughly, so people are still reading a
Speaker 1: lot of physical books. Um. I mean, one really strong
Speaker 1: part of the book market that hasn't been taken over
Speaker 1: at all by the books is children's books, for example,
Speaker 1: and Barnes and Noble even before Ron Barr got there,
Speaker 1: I had made a push to put more children's books
Speaker 1: in their stores, may put more places for kids to read,
Speaker 1: kind of like a sort of pseudo library. The stock
Speaker 1: is down more than right right when I took a
Speaker 1: look at the the release the earnings released, you're talking
Speaker 1: about a retail sales decline of more than two percent.
Speaker 1: You look at the nook sales division that's down. At
Speaker 1: what point does this become a business that is just
Speaker 1: about saving the jobs of the twenty eight thousand people
Speaker 1: that work there rather than about growing the business. Can
Speaker 1: this go on? And definitely, I mean that that's basically
Speaker 1: the conundrum with every brick and water sort of traditional
Speaker 1: retailer out there, it's how do you manage a slow decline.
Speaker 1: There's a lot of growth out there for any retailer
Speaker 1: that has fiscal stores nationwide. So with Barnes and Noble, yeah,
Speaker 1: that is you're managing to decline. Um. You know, they
Speaker 1: made this big push into digital books with the Nook
Speaker 1: and had these Nook tablets and for a while they
Speaker 1: were okay and did pretty well, but eventually they got
Speaker 1: crushed by Amazon and iPads and everything else. So it's
Speaker 1: much diminished business as far as that. But yes, no,
Speaker 1: I think a big part of this is how do
Speaker 1: you manage a declining business and how do you sort
Speaker 1: of stabilize it getting back to a growth business. I
Speaker 1: mean that seems out of the question. Of course, part
Speaker 1: of the backdrop has been in some weak retail segments.
Speaker 1: It's not just Barnes and Noble when you look at
Speaker 1: the consumer but quickly, uh analysts of what are they
Speaker 1: saying about barn Is there anybody out there saying, oh,
Speaker 1: it's beaten up by it? Um? I haven't seen that,
Speaker 1: but you know, if the stock is every and when
Speaker 1: the soccer is selling them when someone's buying it obviously.
Speaker 1: So UM, you know it's it's still has positive cash flow,
Speaker 1: it's still is profitable. Um, it doesn't have a lot
Speaker 1: of debt to deal with. Its pretty good shape, all right,
Speaker 1: Matt Townsend, thank you very much for joining us. He's
Speaker 1: a retail reporter for a Bloomberg giving us the lowdown
Speaker 1: on Barnes and Noble and the shares down more than
Speaker 1: eleven percent. This is Bloomberg. Yeah. Miss. Olympic up Day
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