Bricks & Mortars

Now that news about Borders Bankruptcy has gotten a bit stale (even with announcements declaring they'll be out of Chapter 11 by summertime), I'm noticing articles popping up that are predicting the fall of the next big brick & mortar, Barnes & Noble.  Even though it's faring better than Borders, analysts are now saying it won't have much choice but to follow in Borders footsteps, declaring that B&Ns only saving grace is the Nook (well, that and better management).

The problem is, Borders is currently beating B&N in sales by offering their liquidation clearance. Even with the number of coupons flooding the market, it's hard to beat the mentality of a clearance sale (even though most of the B&N coupons provide a deeper discount than the Borders clearance prices). Follow that up with a 4.9% drop in overall sales, and people start to get worried. Stock prices start to drop even further.

Last year, Barnes & Noble declared that it would be going in a new, more digital, direction - reducing the footprint of its Brick and Mortar stores - adding eBooks and toys.  This seemed like a strong plan to keep the chain afloat.  Except, just before they announced this, they added to their total number of stores by taking on Riggio's B&N College stores. Good deal for Riggio, but can B&N survive that amount of debt and maintain that amount of physical space at a time when eBook sales continue to soar, and physical book sales continue to drop?  That's the $596M question, I suppose.

Hmm...Barnes & Noble Kills Dividend [WSJ; feb 22, 2011]
Barnes & Noble Stock Dips [Galleycat; Mar 15, 2011]
Barnes & Noble Stock Hits New Low [WSJ; Mar 16, 2011]
Borders' Chapter 11 bankruptsy boosts Barnes & Noble, right? Wrong. [; Mar 16, 2011]

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