After facing a tough holiday season, Barnes & Noble, Inc. (NYSE:BKS) will close approximately 20 stores annually over the next decade.
This comes on the heels of last week’s news that the bookseller saw a 10.9 percent sales decrease over the previous year’s holiday season. Book sales at stores, open a minimum of a year, dropped 3.1 percent.
According to the Wall Street Journal, Mitchell Klipper, chief executive of Barnes & Noble’s retail group said during an interview last week, ”In 10 years we’ll have 450 to 500 stores.” As of Jan. 23, the company had 689 retail stores with 674 separate college stores from a second chain.
This isn’t the first time the company has closed stores.
Over the last decade, it has closed an average of 15 stores per year while it continued opening 30-plus stores annually until 2009. In 2008, its consumer bookstores peaked with 726 stores without including its now closed B. Dalton stores.
Since 2009, new store openings have slowed to an almost-complete halt as consumers have moved toward purchasing digital books. For this fiscal year, Barnes&Noble only opened only two stores, reported the Wall Street Journal.
While the number of stores declines, Klipper still has confidence in his company’s business model. With the smaller number of stores, he said, “You have to adjust your overhead, and get smart with smart systems. It is what it used to be when you were opening 80 stores a year and dropping stores everywhere? Probably not. It’s different. But every business evolves.”
Barnes & Noble, Inc. (NYSE:BKS) has also faced increasing competition and a loss of market share from rival Amazon.com Inc. (NASDAQ:AMZN). The company has seen its print market get smaller thanks to the rise of less expensive e-books and discounted print books, which is a big sell for Amazon.com, Inc. (NASDAQ:AMZN). According to market researcher Nielsen BookScan, unit sales for print books fell 9 percent in the U.S. in 2013 and since 2007, they’re down 22 percent.
Not helping Barnes&Noble is its two new new Nook tablets. Nook products sold in stores and online during the holiday season declined from the previous year while competition increased from Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) for their tablets.
But it’s not all doom and gloom for the company. It is still profitable and in fiscal 2012, it saw $317 million in earnings before interest taxes depreciation and amortization.
David Strasser, an analyst with Janney Montgomery Scott LLC, recently projected Barnes & Noble’s retail group’s EBITA, which also includes BN.com, will increase 7 percent in fiscal 2013 (ends in April) but for fiscal year 2014, it will see a modest decline.
Barnes & Noble, Inc. (NYSE:BKS) is currently trading at $12.90, down $2.05.