B & N Revenue Plunges From 6.75 Billion to 3.89 Billion Yet Still Paying An 8% Dividend – Big Shareholders Suckiing Out $$$$ ?
Seeking Alpha, a critical wall street and financial website, has questioned Barnes and Noble’s continuous dividend payout yielding 8%, asking if this is sustainable during recent huge drops in revenue. Read the entire article, CLICK HERE.
Some comments on Barnes and Noble and Amazon for historiical background as follows (not part of the Seeking Alpha article):
B & N in past years made more bottom line money on the game business they purchased. The game sector, which was around 10% of revenue threw off about 90% of the profit. This has changed, but shows that their costs of selling books was always higher than the thousands of independent booksellers that they muscled out of business with the superstore fad. They failed to exploit their lead in the game business, which is now mainly online. They also failed years ago to play fair with the used book market when they had a chance to make a great deal with a company called abebooks. So guess who finally swooped in to buy abebooks? You guessed it, amazon, which now has a basic monopoly on online used book sales. B & N’s partnership with European giants in barnesandnoble.com also went south with huge losses until they were forced to buy out their Euro partners. 20 years of bad decisions has led to this moment. Is the high dividend just the mechanizim for big shareholders to suck the carcass dry?
Pickwick to B. Dalton to Barnes & Noble to Gone Forever.
Nobody wants to look under the hood of the B & N engine, where you would find that the 8 cylinder engine is down to 4. For instance, in Southern California, they have closed many of their best store locations. Gone is B & N from Pasadena in the Old Town District, gone is B & N from the Encino area of Ventura Blvd. And don’t forget the huge loss they got when they bought B. Dalton books, which operated 798 stores in malls across America. Their mis-management closed all of them, including the big Hollywood Boulevard Store that was called Pickwick Bookshop that B. Dalton had bought. How soon you all forget the decades of bad management, probably over 1,000 stores closed, the thousands of employees laid off, the financial losses to shareholders, the mess with the European media giants in BarnesandNoble.com. The question is really: Was B & N a stock fraud for the last 20 years, or just the worst management ever seen?
Barnes and Noble does a lot of things right. They have great selection. They have a nice clean website. They have a lot going for them with Nook, self-publishing, and many other strategies. They have nice Starbucks cafes, wi-fi, and good locations. So how can they improve and survive? Various articles point out the disaster from bad upper level management. Add to the list the recent dumb idea of in-store beer and wine restaurants.
They can turn some things around by having more in-store celebrity author events, use video marketing on social media, live stream the events from their stores with easy ordering from home couch potatoes, and everything to get folks into the stores where impulse buys will help the bottom line. For the stay at home crowd, they should compete with amazon by selling used, rare and out of print books. They did this at one time, with thousands of great vendors who dropped shipped. The program could be re-started to compete with amazon. It went away due only to bad management at the top level. Amazon has a lot of flaws and weakness in the way they treat their vendors. By being fair, B & N could lure many thousands of them away from amazon and add a huge income stream. Forget the beer, go with the books.
Amazon, which has a monopoly on used book sales in the U.S. and a stranglehold on new book sales, continues to erode sales at Barnes and Noble. Even President Trump has recently commented on amazon’s more than cozy deal with the U.S. Postal Service. What he failed to mention was not only does amazon get special postage rate deals, but it also has the post office delivering mail on Sundays in selected cities. This has got to be a loser for the Post Office, it totally obliterates the economy of scale needed for sustainability. What is interesting is to go way back in the history timeline to the 1950s. The Post Office delivered mail twice a day during the week in Los Angeles, and I assume, most other cities. What happened to that? We always think our civilisation as getting better every year, when the truth is far different. Not only has the Post Office deteriorated, closed thousands of offices, etc., but now they seem to be tied into a losing deal with the amazon monopoly.
Let’s hope tha 2018 will bring some sanity back to the world. It’s just my opinion, but: Amazon is a monopoly and should be broken up. Google should be seized by the U.S. Government and the search engine made a national public utility. Barnes and Noble needs to get its act together, it has opportunities and possibilities, but the prognosis for them is somewhat grim. Happy New Year everyone!
What do you think? Bookseller and Book Lover comments welcome!
Update January 4th, 2018. Barnes & Noble, Inc. (NYSE: BKS) today reported that total holiday sales for the nine-week holiday period ending December 30, 2017 as declining 6.4%. Comparable prior year store sales also declined 6.4% and online sales dropped 4.5%. The stock price tanked to $6.50 per share. A grim picture indeed. The question now becomes can Barnes & Noble survive at all? Is there even any time left for a new management turn-around plan?