Editor’s Note: This article was originally published on October 3, 2018.
New York
UJ Business
—
Shares of Barnes & Noble surged over 20% after the board announced it would explore potential sale options for the struggling retail chain.
On Wednesday, the board disclosed that it had established a special committee to evaluate offers, including one from Len Riggio, the longtime chairman and largest shareholder, who owns nearly 20% of the company.
Additionally, Barnes & Noble revealed that an unidentified shareholder had quickly amassed a significant stake in the company. To protect against a potential hostile takeover, the board approved a strategy known as a poison pill.
This poison pill provision will be triggered if the unknown party acquires 20% or more of the stock, allowing existing shareholders to purchase additional shares at a 50% discount, thereby diluting overall share value.
This news comes shortly after another investor disclosed a nearly 7% stake and indicated he had discussions with Riggio regarding acquiring the company.
The board stated that Riggio would support any transaction recommended by the committee with his vote.
This potential sale adds another chapter to the ongoing issues faced by Barnes & Noble, which is in the process of finding its fifth CEO within five years.
The company dismissed its most recent CEO, Demos Parneros, in July, citing unspecified policy violations, with subsequent disclosures revealing claims of sexual harassment and bullying as contributing factors to his termination.
In August, Parneros initiated a defamation lawsuit against his former employer in federal court, claiming he was wrongfully terminated.
Barnes & Noble continues to operate over 600 stores with a workforce of 23,000 employees, but same-store sales declined by 6.1% year-over-year in the last quarter.
Their sales have been on the decline for four consecutive years, with new initiatives like smaller store formats and a kitchen concept failing to attract customers back.
Neil Saunders, managing director at GlobalData Retail, noted in September that many stores “appear worn out, overly large, and messy, lacking compelling reasons for consumers to visit and shop.”
He predicts that Barnes & Noble may close more locations: “The company must downsize to survive.”
As Barnes & Noble grapples with its challenges, independent bookstores are experiencing a resurgence.
The American Booksellers Association reported a 6% increase in the number of independent bookstores last year, bringing the total to 2,470.
