National Real Estate Investor, Publish Date: June 20, 2019

After months of uncertainty regarding what will happen to the flailing Barnes & Noble bookstore chain, a sale is imminent. U.K.-based hedge fund Elliott Advisors announced earlier this month that it will acquire the company in an all-cash transaction valued at $683 million, including debt. That breaks down to $6.50 per share.

…In an effort to breathe new life into Barnes & Noble, Elliott is bringing in James Daunt, CEO of Waterstones, to run the company. Daunt is expected to use the same turnaround tactics for Barnes & Noble that he used for the once-struggling Waterstones, including re-investing in stores and empowering local bookselling teams, Barnes & Noble revealed.

Industry Reaction

Whether a turnaround is possible will be largely dependent on the financial structure and debt obligations that will be placed on the operating company, says Rachel Elias Wein, president of WeinPlus, a St. Petersburg, Fla.-based strategy and management consulting firm.

… A turnaround is possible; however, it will be a daunting task to overcome the age of e-readers, says Ben Terry, vice president of retail brokerage at the Coreland Cos., a real estate services company based in Tustin, Calif.

“I believe that Elliott Management has probably given Barnes & Noble a fighting chance by hiring the right gentleman for the job, James Daunt,” he says. “Daunt was successful turning around Waterstones in the U.K.”

Terry says Daunt accomplished that feat by eliminating doing business through the sales reps and creating a small team of buyers that would select books of the month.

“Furthermore, he gave the individual store managers the autonomy to tailor their stock to customers’ tastes,” Terry adds. “It worked in Europe, but the big question is: can it work here in the U.S.?”

There is still a demand and a need for a Barnes & Noble in the retail community, in Terry’s view.

“I’m just not sure if they can make the drastic changes needed to support their large footprint stores,” he notes. “If they are successful in downsizing their footprint and lowering their costs without sacrificing sales, then it might work. Only time will tell.”


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