Shares of the popular book-seller have soared to highs of 30% from yesterday’s closing price. Barnes & Noble Inc. (NYSE:BKS) shares closed at $5.45 a share yesterday and opened at $6.70 a share today. This is the largest gap-up in price the stock has seen all year. During the early-hours of the trading day, shares hit highs of $7.15 a share. Barnes & Noble shares are also approaching the 52-week high of $8.00 a share.
This price action is most likely related to the company’s strategic alternatives process announcement made yesterday. Barnes & Noble is set to form a special committee to perform a formal review after receiving “expressions of interest from multiple parties.” There is no guarantee on any transaction, but this time around chairman Leonard Riggio is said to be on board with everyone else. Last year, the company was offered to be taken private by Sandell Asset Management, but Riggio rejected the deal.
It is obvious the company has not been performing well and has had a hard time adjusting to new competition and market trends.
Barnes & Nobles has been around since the 1800s and has established themselves as the nation’s largest retail bookseller. The company has roughly 633 locations throughout the United States which not only sell books but also offer other amenities such as cafes and events for children.
When the market began to feel the wrath of e-commerce and Amazon, Barnes & Noble made a few changes to try and compete.
In reaction to changing trends, the company rolled out their own e-commerce platform as well as their own e-book reading hardware solution. Unfortunately, the Nook e-reader was not as successful as their competitor Amazon’s Kindle e-reader.
After some solid growth leading up to 2012, Barnes & Noble performance began to slow down. Since than revenues have fallen nearly 50% from $7.1 billion in 2012 to $3.8 billion in 2017. In-store sales have been declining for 20 of the previous 23 quarters, showing less strength in their brick-and-mortar operations as well. This dramatic loss in revenue was not caused by consumers vanishing, but from consumers turning to competitors like Amazon.
The company has attempted to remedy its brick-and-mortar problem by closing existing locations and prototyping new locations designed to be less cost-intensive and more enjoyable for consumers. The prototype stores are designed to be much smaller scale giving the business a more modern feel.
We’re going to follow developments closely to see exactly what offers Barnes & Noble is feeling out. Check back for more news daily!
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