B&N Until the End?

The Wall Street Journal, February 23, 2011
"Barnes & Noble Profit Slides" By JEFFREY A. TRACHTENBERG

So, last week, Borders filed Chapter 11 bankruptcy. By definition, Chapter 11 is "a section of the bankruptcy Code that provides for thereorganization of an insolvent corporation under court supervisionand can establish a schedule for the payment of debts and, insome cases, a new corporation that can continue to do business." Earlier this week, it was reported that Barnes & Noble's profit has declined by 25 percent. Even though Barnes & Noble is the largest bookstore in the country, competing with Amazon.com, Google, and Apple is becoming even more difficult. In order to turn things around, Barnes & Noble has cancelled its quarterly dividend. Doing so has freed up $60 million that is planned to be used for digital strategies and other opportunities in the future. 


Digitalization is growing exponentially these days because of online bookstores and e-readers. It has been said that this digitalization played a role in Borders' closing because the store did not jump on the digitalization bandwagon fast enough. Trying to keep up with this digital movement, Barnes & Noble has spent a large sum in order to stay in the running alongside the others said above. This sum of money is sinking profit for Barnes & Noble. The company's contribution to the digital movement is the Nook line of e-readers. Currently, Barnes & Noble makes up 25 percent of the e-book market in the United States, and they sell twice as many e-books as they do physical books within the store and online at BN.com. 


By midday Tuesday, shares were down 11 percent, but Barnes & Noble says the company is still going strong. Even though physical book sales are continuing to decline, the quality of customer service when purchasing a Nook and the addition of educational books and games are helping Barnes & Noble remain confident. Barnes & Noble is also hoping that the closing of a couple hundred Borders stores will boost revenues again. Finally, based on Borders announcement last week, Barnes & Noble said that it will not be issuing any more sales or earning guidance for the remainder of the 2011 fiscal year. 




When buying books, I always go to Barnes & Noble; I have never been to Borders. I have no personal knowledge of Borders' quality of service; but nonetheless, I hate to hear more evidence of the decline of physical books. Now, I love technology, but there is something about turning a real page of a book that brings satisfaction. In regards to the recent news, I think Barnes & Noble is doing a fine job of staying proactive during this digitalization boom. The store is still staying true to the physical book, yet it still recognizes the need to reinvent and redesign during this time of uncertainty within the journalistic world. Will physical books be gone forever? This is the million dollar question. The Nook has been a great life booster for Barnes & Noble during this time. It will be the comforting employees, who explain how a Nook works, that keep customers in the store. 


This article is written very thoroughly. The author explains the situation at hand and elaborates on key pieces of information such as the numbers of Barnes & Noble and the digitalization boom. At times, I think terms like Chapter 11 should be further explained, but then I remember that this is The Wall Street Journal. Most business minded people, who already know this term, are going to be the bulk of the readers. Also, there could be a bit more definition or clarity when talking about the numbers; but in the end, I am glad this story is being covered in The Wall Street Journal. The business and the journalism worlds have collided, not just to discuss the life expectancy of a bookstore but also to discuss the life expectancy of the physical book and the digital world.