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Why would anyone want to buy a bookstore?

Tracey Samuelson Feb 25, 2013

Why would anyone want to buy a bookstore?

Tracey Samuelson Feb 25, 2013

Barnes & Noble’s stock closed up over 10 percent Monday on news that the chairman of its board of directors, Leonard Riggio, wants to buy the company’s retail arm — the stores and the website — and take them private.

That would leave the company’s unprofitable Nook Media division public and on its own.

Given that ebooks are often heralded as the future of the publishing industry, this sale, if it goes through, prompts some questions:

Question #1: Why would anyone want to own a bookstore?

To start, after Borders closed, Barnes & Noble became the last man standing of the big, national booksellers.

That still has value, according to Michael Norris, a publishing industry analyst with Simba Information.

Norris says despite all the hype around ebooks, “people still buy print books and people who buy digital books, about 3 out of 4 still buy print.”

 Barnes & Noble’s retail division still turns a profit.

Question #2:  Why not keep the digital side?

Barnes & Noble’s ereader, the Nook, runs in third place to Apple’s iPad and Amazon’s Kindle. It would take a great deal of money and time to turn it from an “also-ran” to a real money maker.

“The devices are nice, they’re competitive,” says Peter Wahlstrom, a senior equity analyst with Morningstar. “The tough part is that the Nook is just not top of mind for consumers.”

Question #3: If Chairman Leonard Riggio takes the profitable bookstore business private, what’s left for investors?

In addition to the e-readers, Nook Media contains college bookstore and college marketing businesses.

“They are repackaging the bookstore into the college store and college stores don’t close down,” says  Al Greco, a marketing professor at Fordham University who specializes in the publishing industry. “This actually a very stable part of the market.”

Greco says all those students buying text books and T-shirts offer up nice, reliable chunk of change.

Question #4: Will it work?

The final question, Greco says, is whether that college business can support the Nook while it tries to turn a profit. And that one, he says, we can’t answer yet.

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