Retail
Barnes & Noble CEO Proves He Belongs Among 2016's Worst CEOs
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Bookseller Barnes & Noble Inc. (NYSE: BKS) posted its highest-ever stock price at above $45 a share in March of 2006. By March of 2011 it had dropped below $9 a share, and it posted a new all-time low of $7.25 in February of last year.
B&N reported Thursday that same-store sales for the nine-week holiday period ended December 31 plunged 9% year over year. Online sales rose 2% in the same period.
The company blamed the decline on lower foot traffic, as well as a drop in sales of coloring books and artist’s supplies, both big sellers in the 2015 holiday season. Last year’s release of Adele’s “25” CD also boosted B&N’s 2015 sales. Combined, these items accounted for about a third of the store’s sales drop.
While CEO Leonard Riggio told The Wall Street Journal that the decline in store traffic was an issue for “almost every major retailer” this year, that does not excuse him or his management team for being ineffective. Riggio made our list of 2016’s worst CEOs for a reason.
Riggio acquired a single B&N store in 1971 and built it into a solid business that still claims 640 retail stores in 50 states. But brick-and-mortar sales have been declining for years, and there is no reason to expect a change. The company tried developing its own e-reader, the Nook, which B&N failed to spin off as a separate company a few years ago, and it is now stuck with until Nook finally takes its last breath.
To make matters worse, the company’s primary antagonist, Amazon.com Inc. (NASDAQ: AMZN), is opening a 4,000-square-foot store in Manhattan soon and that cannot be good news for B&N.
After the dismal report on holiday sales, the company said its fiscal 2017 same-store sales decline would be 6%, compared with a prior estimate of the low single digits. EBITDA is now forecast at the low end of its previously announced range, but B&N expects operating profit to rise year over year due to cost cutting.
The stock traded down 7% at $10.66 in the early afternoon, in a 52-week range of $7.25 to $13.63. The consensus price target is $15.88. Of 45 million shares floated, just over 10% are short.
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