Barnes & Noble's really bad day: Buyout cancelled, stock plunges

Barnes & Noble is having a Tuesday it would rather forget. On the heels of another disappointing earnings report for the bookseller, Barnes & Noble's chairman and largest investor is ending his bid to buy up the company's bookstores. 

John Raoux/AP
A Barnes & Noble bookstore is seen in Orlando, Fla. Sunday. On Tuesday, Barnes & Noble released disappointing quarterly financial results and its chairman ended an effort to take the company's bookstores private.

Another bleak earnings report and an aborted buyout bid are casting further doubt on Barnes & Noble’s future. 

The bookseller’s chairman and chief shareholder, Leonard Riggio, has backed away from earlier interest in buying up the company’s bookstores. Mr. Riggio announced in February that he was preparing a bid to take Barnes & Noble’s 675 bookstores private. But in a Tuesday filing with the Securities and Exchange Commission, he changed his mind.

“While I reserve the right to pursue an offer in the future, I believe it is in the company’s best interests to focus on the business at hand,” Riggio said of his decision in a statement.

Riggio’s disclosure came on the heels of yet another deflating earnings report for Barnes & Noble. The company’s fiscal 2014 first quarter financial results reported a $87 million loss last quarter, doubling its losses from a year ago. Sales fell 8.5 percent, and revenue tied to the struggling Nook e-reader division, now a separate arm of the company, dipped 20 percent. Sales of Nook devices and software dropped 23.1 percent

The Nook has been a giant source of concern for Barnes & Noble, and for the moment, the company appears to be stuck with it. The company split the Nook business into a separate company from its bookstores in January 2012, and the Nook has been up for sale since. It has yet to find a buyer.

Barnes & Noble’s traditional retail business didn’t fare well either, with revenue dropping 9.9 percent. And a few wildly successful book franchises from last year could be to blame: The company told Bloomberg that nearly half of its sales drop could be attributed to a slowdown after the frenzied demand for Suzanne Collins’ “The Hunger Games” trilogy and E.L. James’ “50 Shades of Grey” trilogy last year. Other booksellers are feeling the post-2012 letdown as well: The Association of American Publishers reported a 4.7 percent revenue loss for trade books in the first quarter of 2013, mostly in the “Hunger Games”-driven young adult category.

But Barnes & Noble has had deeper troubles than the young adult market. The company lost 118.6 million during 2013’s fiscal fourth quarter (the last report before Tuesday’s), with a 34 percent plunge from Nook leading the way. Former CEO William Lynch resigned last month after the Nook business reported a $475 million operating loss for the fiscal year ending in April. On Tuesday's news, company shares plunged 16 percent in midday trading. 

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