NEW YORK, Dec 4 — When Ron Boire was growing up on a dairy farm in upstate New York, helping out around the property for US$2 (RM8.50) an hour, he saw new books as an out-of-reach luxury.
“We didn’t have any money, and my mother was a voracious reader,” he said. “I remember telling a friend, when I grow up, I want to be able to afford hardcover books.”
Boire, who took the helm as chief executive of Barnes & Noble in September, still seems to have a soft spot for physical books. Walking through the first floor of a Barnes & Noble store in Union Square in Manhattan recently, Boire couldn’t help himself from reflexively straightening the jagged piles of books on the display tables so the spines lined up neatly.
Now Boire, 54, the former chief executive of Sears Canada and a retail veteran who has worked at Brookstone, Best Buy and Toys R Us, is under pressure to reverse the fortunes of the beleaguered bookstore chain, which has been stung in recent years by the rise of Amazon, steep losses from its Nook e-reader division and a string of store closings.
To that end, Boire is leading a push to rebrand Barnes & Noble as more than just a bookstore by expanding its offerings of toys, games, gadgets and other gifts and reshaping the nation’s largest bookstore chain into a “lifestyle brand”.
“Everything we do around learning, personal growth and development fits our brand,” Boire said. “There’s a lot of opportunity.”
Facing spiralling losses from store closings, Barnes & Noble is searching for ways to increase foot traffic and drive sales. Last month, the chain held a colouring event at stores around the country, where it doled out sample sheets from colouring books and art supplies. It also recently held a national Mini Maker Faire promoting technology literacy at its stores, with coding and 3-D printing workshops.
Near the front of the Union Square store, a large display table was dedicated to vinyl records and turntables, and another area showcased tech gadgets. Near the registers, a table was covered with adult colouring books, one of the fastest-growing book categories, and art supplies.
“The macro trend is about physical interaction with things,” Boire said. “I think it’s here for the long haul.”
That philosophy could be tested as Barnes & Noble enters the critical holiday shopping period and faces new questions about its financial health after another disappointing fiscal quarter.
On Thursday, Barnes & Noble reported that during its second fiscal quarter of 2016, which ended on October 31, sales fell 4.5 per cent, to US$895 million, compared with the previous year. The company posted a net loss of US$27.2 million, or 36 cents a share, compared with the previous year’s losses of US$5.1 million, or 16 cents a share.
Earnings before interest, depreciation and amortisation fell US$20.5 million, a drop that the company attributed in part to a US$10.5 million severance charge for its former chief executive, Michael Huseby, who became the executive chairman of Barnes & Noble Education, the company’s college bookstore business.
Toys and games, a small but increasingly critical part of the business, provided a bright spot, growing nearly 15 per cent in the last quarter. In a conference call with investors, Boire underscored this point by singling out colouring books and strong sales of Adele’s new album “25” among the company’s recent successes.
Some analysts said there were reasons to be hopeful about the company’s future. Through Black Friday weekend, comparable store sales were up 1.1 per cent, providing an encouraging forecast for the chain’s holiday sales.
“The only number that counts is Christmas,” said John Tinker, a media analyst at Gabelli & Co.
Barnes & Noble stands to benefit from falling e-book sales and the stability of print, an unexpected reversal that could help drive customers back to brick-and-mortar bookstores. Paperback sales were up 13 per cent in the first seven months of 2015, while e-books were down 11 per cent, according to the Association of American Publishers.
“As a retail bookseller, it’s in decent shape, considering the direction the company was heading with so many store closings and so much visible bleeding in terms of the Nook business,” said James McQuivey, an analyst at Forrester Research. “There’s solid leadership, whereas before, there was infighting about what the strategy would be.”
Still, the company’s struggles are probably far from over. Barnes & Noble has been battered by Amazon, its powerful online rival, and has incurred large financial losses from its largely failed attempt to carve out territory in the e-book space with the Nook. Although the company posted lower losses in its Nook division in the most recent quarter, sales were still disappointing, as the Nook segment tumbled 31.9 per cent to US$43.5 million, primarily because of lower digital content sales.
The chain has closed more than 70 stores around the country in the last five years and plans to close 10 more in the coming year.
Analysts and investors have taken Boire’s appointment as a sign that the company will continue to expand and emphasise its non-book merchandise. Boire got his start in sales at Sony in the 1980s, and from there went on to positions at Best Buy, Brookstone, Toys R Us and Sears before joining Barnes & Noble.
Some warn that Barnes & Noble needs to tread carefully to avoid alienating long-time customers who worry that books might become an afterthought.
“The real question is whether they can do it in an organic, integrated fashion, so that they’re not offering random merchandise, but it’s connected to a broader philosophy,” said Lorraine Shanley, president of Market Partners International, a publishing consultant firm.
At the same time, Barnes & Noble has made a push to make its thousands of books more enticing and searchable. Categories like parenting and Christian publishing that were once haphazardly organised alphabetically by author are now broken out into logical subcategories, so that parenting books are stocked according to the age of the child, and Christian books are arranged into categories like relationships or health and wellness. “The sales results were instantaneous,” said Mary Amicucci, who oversees the adult consumer and children’s book business.
The company has doubled the amount of floor space devoted to graphic novels and manga, and has expanded its stock of collectible figurines.
Such efforts might not be enough to restore investors’ confidence in the bookseller’s uncertain future, particularly as Amazon continues to expand. Amazon recently opened its first physical retail store in Seattle and indicated that it might open more stores around the country.
“There’s still another round of disruptive innovation to come,”’ McQuivey said. “It’s unclear whether Barnes & Noble is in any better position to deal with it than it was during the last round of disruptive innovation.” — The New York Times
