WEBVTT - Bloomberg's Townsend on BKS: CEO Ouster, Company Outlook(Audio)

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Charlie Pellett, fed Metted Wednesday. We've got stocks fluctuating

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<v Speaker 1>over to the first Word Breaking news desk for today's

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<v Speaker 1>afternoon call. Here he is one and only Bill Maloney.

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<v Speaker 1>A good afternoon, Charlie Maybeways averages are quiet today, with

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<v Speaker 1>the down currently down four points. SUPs are a little change,

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<v Speaker 1>the NAZAC falls nine and a half, the small cap

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<v Speaker 1>six hundred is down three points, and the US tenn

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<v Speaker 1>yield at one point five six out of tenness be

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<v Speaker 1>sectors are higher, let by gains and utilities, Financials and consumers, Staples,

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<v Speaker 1>consumer discretionary and telecom led to the downside down. Transports

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<v Speaker 1>rise twelve points and as a by texts fall five.

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<v Speaker 1>Utilities gained eight and the VIX is down by one

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<v Speaker 1>point four percent. Down leaders included three M, DuPont and Fiser,

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<v Speaker 1>while Cisco, McDonald's and Intel led to the downside. In

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<v Speaker 1>the retail space, Staples, Target, and Low's all fell after

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<v Speaker 1>their results, while Urban Outfitters stored as much as nineteen

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<v Speaker 1>percent after its earnings after the belt Tonight look for

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<v Speaker 1>earnings from Cisco. Estimates are for sixty cents on revenues

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<v Speaker 1>of twelve point five seven billion. Live from the First

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<v Speaker 1>Breaking News desk on Bill Maloney, Charlotte, all right, thank

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<v Speaker 1>you very much, Bill Maloney, and to hear live breaking

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<v Speaker 1>news over your bloombread tip squawk squ a w K

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<v Speaker 1>on your terminal. I'm Charlie Pellett. That's a bloom Bread

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<v Speaker 1>business flash. You're listening to Taking stock with Kathleen Hayes

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<v Speaker 1>and Pim Fox on Bloomberg Radio. Another chapter for Barnes

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<v Speaker 1>and Noble. Well, it's beginning with a stock decline of

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<v Speaker 1>nearly twelve percent to day after its CEO, Ron War

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<v Speaker 1>was ousted. Apparently he's not the right person to revample

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<v Speaker 1>bookstore chain obviously struggling to compete with Amazon and other

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<v Speaker 1>online sellers. For anybody, though, who likes going into those

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<v Speaker 1>big Barnes and Nobles and then in a cup of

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<v Speaker 1>coffee looking at books. This is kind of a dark cloud.

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<v Speaker 1>Matt Townsend is here retail reporter for Bloomberg News, and

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<v Speaker 1>he's been taking a look at this today. So you know,

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<v Speaker 1>the CEO Austre is one thing, and then these there's

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<v Speaker 1>these big forces that are pushing against Barnes and Noble.

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<v Speaker 1>But let's start with the CEO. What happened, Well, he

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<v Speaker 1>was there barely over a year, and you know, when

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<v Speaker 1>he was hired, he was seen as a guy who

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<v Speaker 1>had a ton of experienced retail He worked for Toys

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<v Speaker 1>r US, Best Buy, UM, and his big idea was,

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<v Speaker 1>you know, books much very competitive market. So we're gonna

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<v Speaker 1>put more non book things in Barnes and Noble, more toys,

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<v Speaker 1>more accessories, gifts. UM. They recently announced that they were

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<v Speaker 1>gonna start testing putting beer and wine in their store,

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<v Speaker 1>which for a lot of people made a lot of

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<v Speaker 1>sense because that goes well with reading books and their

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<v Speaker 1>cafes and things like that. UM. So we don't really

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<v Speaker 1>know behind the scenes why he was actually asked to.

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<v Speaker 1>The results have been mixed. UM. You know, it's not

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<v Speaker 1>drastic declines right now in the business, they've kind of stabilized. Um.

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<v Speaker 1>But at the end of the day, this is still

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<v Speaker 1>Len Riggio's company. He founded it over fifty years ago.

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<v Speaker 1>He's still the chairman. He was set to retire in September,

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<v Speaker 1>kind of walk away and just be a board member.

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<v Speaker 1>No longer chairman. He is now staying, going to find

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<v Speaker 1>a new CEO and run the company while they look

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<v Speaker 1>for the next CEO. Is this really a bookstore company

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<v Speaker 1>or is this a real estate business that happens to

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<v Speaker 1>sell books and whatever else they can sell in those

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<v Speaker 1>large square foot print you know, I mean it's it's

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<v Speaker 1>it's definitely shifting away from a bookstore that they have

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<v Speaker 1>to and that's they're deversifying. As far as the real

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<v Speaker 1>estate of me, I believe most of their stores are

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<v Speaker 1>just leased. UM. So it's not that they own a

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<v Speaker 1>bunch of real estate that's worth a lot of money.

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<v Speaker 1>They gonna let the releases roll off. That's what they've

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<v Speaker 1>into doing. That's what they've been doing. They've been UM.

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<v Speaker 1>When at least comes up, they either get out of

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<v Speaker 1>it or they renegotiate it. UM. But I will say,

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<v Speaker 1>you know one thing, going for Barnes and Noble is

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<v Speaker 1>that the publishing industry does not want to see Barnes

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<v Speaker 1>and Noble go away because then they'd be left with

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<v Speaker 1>dling with just Amazon, which is not a good thing

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<v Speaker 1>for them having the publishers. So the publishers will probably

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<v Speaker 1>and then mall owners like Barnes and Noble too, because

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<v Speaker 1>it draws a lot of foot traffic, even if no

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<v Speaker 1>people aren't always buying books when they go in the stores.

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<v Speaker 1>So are reasons why Barnes and Noble probably has a

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<v Speaker 1>much longer life than maybe some other retailers because publishers,

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<v Speaker 1>publishers want to keep them in business, and the malls

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<v Speaker 1>way I like them. Okay, Bloomberg News, your team reporting

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<v Speaker 1>that you're you're reminding us that Amazon's testing physical bookstores

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<v Speaker 1>could ultimately open hundreds of them. So obviously, if Amazon

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<v Speaker 1>is thinking of doing this, it's not like there's something

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<v Speaker 1>just totally oh you're there's there's no reason to be

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<v Speaker 1>a brick and mortar bookstore, and Barnes and Noble has

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<v Speaker 1>the brand Barnes and Noble's. Um. What Amazon does with

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<v Speaker 1>a physical location would probably incorporate, you know, places to

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<v Speaker 1>a place to pick up your packages and stuff like that,

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<v Speaker 1>so it would be, you know, it's branding, it's they

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<v Speaker 1>could sell all their you know, their their their tablets

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<v Speaker 1>and things like that. But that's true. I mean, you know,

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<v Speaker 1>the books have taken away some of the market share

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<v Speaker 1>for physical books, but the books have kind of plateau there.

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<v Speaker 1>They're the market roughly, so people are still reading a

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<v Speaker 1>lot of physical books. Um. I mean, one really strong

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<v Speaker 1>part of the book market that hasn't been taken over

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<v Speaker 1>at all by the books is children's books, for example,

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<v Speaker 1>and Barnes and Noble even before Ron Barr got there,

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<v Speaker 1>I had made a push to put more children's books

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<v Speaker 1>in their stores, may put more places for kids to read,

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<v Speaker 1>kind of like a sort of pseudo library. The stock

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<v Speaker 1>is down more than right right when I took a

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<v Speaker 1>look at the the release the earnings released, you're talking

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<v Speaker 1>about a retail sales decline of more than two percent.

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<v Speaker 1>You look at the nook sales division that's down. At

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<v Speaker 1>what point does this become a business that is just

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<v Speaker 1>about saving the jobs of the twenty eight thousand people

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<v Speaker 1>that work there rather than about growing the business. Can

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<v Speaker 1>this go on? And definitely, I mean that that's basically

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<v Speaker 1>the conundrum with every brick and water sort of traditional

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<v Speaker 1>retailer out there, it's how do you manage a slow decline.

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<v Speaker 1>There's a lot of growth out there for any retailer

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<v Speaker 1>that has fiscal stores nationwide. So with Barnes and Noble, yeah,

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<v Speaker 1>that is you're managing to decline. Um. You know, they

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<v Speaker 1>made this big push into digital books with the Nook

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<v Speaker 1>and had these Nook tablets and for a while they

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<v Speaker 1>were okay and did pretty well, but eventually they got

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<v Speaker 1>crushed by Amazon and iPads and everything else. So it's

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<v Speaker 1>much diminished business as far as that. But yes, no,

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<v Speaker 1>I think a big part of this is how do

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<v Speaker 1>you manage a declining business and how do you sort

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<v Speaker 1>of stabilize it getting back to a growth business. I

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<v Speaker 1>mean that seems out of the question. Of course, part

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<v Speaker 1>of the backdrop has been in some weak retail segments.

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<v Speaker 1>It's not just Barnes and Noble when you look at

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<v Speaker 1>the consumer but quickly, uh analysts of what are they

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<v Speaker 1>saying about barn Is there anybody out there saying, oh,

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<v Speaker 1>it's beaten up by it? Um? I haven't seen that,

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<v Speaker 1>but you know, if the stock is every and when

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<v Speaker 1>the soccer is selling them when someone's buying it obviously.

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<v Speaker 1>So UM, you know it's it's still has positive cash flow,

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<v Speaker 1>it's still is profitable. Um, it doesn't have a lot

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<v Speaker 1>of debt to deal with. Its pretty good shape, all right,

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<v Speaker 1>Matt Townsend, thank you very much for joining us. He's

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<v Speaker 1>a retail reporter for a Bloomberg giving us the lowdown

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<v Speaker 1>on Barnes and Noble and the shares down more than

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<v Speaker 1>eleven percent. This is Bloomberg. Yeah. Miss. Olympic up Day

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