B&N to split off Nook business

Barnes & Noble is to separate its Nook Media and Retail businesses in a bid to increase shareholder value.

Michael P Huseby, c.e.o of B&N, said the companies would continue to work together after separation, but stood “the best chance of optimising shareholder value if they are capitalised and operated separately.”

The US bookseller announced today (25th June) that it intended to complete the separation of the two public companies, subject to regulatory approval, around the end of the first quarter next calendar year.

The news comes at the same time as sales of Nook e-readers and e-books have been steadily falling over the last 18 months. At the same time as announcing the separation of the two companies, B&N said that Nook Media revenues had decreased 23.3% to $87m for the fourth quarter and fallen 35.2% to $506m across the full year. Meanwhile, Nook EBITDA losses were $56m for the fourth quarter and $218m for the full year, both including previously disclosed asset impairment charges of $28m.

B&N’s bookstore arm, by contrast, is performing much more strongly, while still seeing a small sales decrease across the whole year. B&N’s bookstores and online businesses saw revenues of $956m for the quarter, up 0.8%, while full-year revenues were $4.3bn for the full year, down 6.0%.  Its College arm, including the company’s campus bookshops, achieved revenues of $298m for the quarter, up 18.2% and $1.7bn for the full year, down 0.9%.

A statement said: “With the objective of optimising shareholder value, the company’s board of directors has authorised management of the company to take steps to separate the Barnes & Noble retail and nook media businesses into two separate public companies.”

Michael P. Huseby, c.e.o of Barnes & Noble, continued: “In fiscal 2014 we have taken certain actions to strengthen the company, including the ongoing rationalisation of the Nook business, growing the college business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve retail’s sales trends. Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions.  We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of Nook Media and Barnes & Noble Retail.  We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately.”

He added: “We fully expect that our Retail and Nook Media businesses will continue to have long-term, successful business relationships with each other after separation.”

Overall, the company's revenues increased 3.5% for the fourth quarter to $1.3bn in comparison to the prior year, while (EBITDA) improved to $11.2m, compared with a loss of $124.6m in the prior year. For the full year, consolidated revenues decreased 6.7% to $6.4bn year-on-year, while EBITDA increased to $251m, compared to $7m a year ago.

The company said it expected bookstore and college bookstore sales to decline in the low-single digits in 2015, while EBITDA losses in the NOOK segment would reduce.

Earlier this month, B&N revealed its Nook employees would move to a new 88,000 sq ft office in Santa Clara, California, from its original 208,000 sqft headquarters in Palo Alto, also in California, next year, in a bid to reduce lease costs. Meanwhile its college digital education employees would relocate to a facility in Mountain View, California. The company also announced it would partner with Samsung to build co-branded tablets.