Bookstore chain Barnes & Noble is not only still alive, but is slowly adding new locations to the company’s portfolio. Earlier in the week, Barnes & Noble confirmed that it made an offer to acquire Tattered Cover Book Stores, which is an iconic independent bookstore in Denver. The deal is subject to approval from the U.S. Bankruptcy Court.
Barnes & Noble was taken private in 2019 by Elliott Investment Management for approximately $683 million, which was a 43% premium over Barnes & Noble’s 10-day closing price at the time. As part of the deal, James Daunt, the managing director of London-based Waterstones Booksellers, became CEO. Barnes & Noble has existed since then as a privately held, wholly owned subsidiary of Elliott. A former Barnes & Noble subsidiary, Barnes & Noble College Booksellers, was spun off from the company in 2015 and still trades as an independent company called Barnes & Noble Education (NYSE:BNED).
Barnes & Noble said it remains committed to serving local communities with excellent bookstores and promoting literacy. In Denver, the company said it is looking forward to preserving what has made Tattered Cover so special within the book selling community for over the last 50 years.
Next chapter
Barnes & Noble is being credited with a mini turnaround since Daunt took over the company. In 2023, Barnes & Noble opened more new bookstores in a single year than it had in the ten-year period from 2009 to 2019. The company expects to open over 50 new bookstores this year and continues to remodel existing locations, including a $4 million makeover of a high-profile location in New York City’s Upper West Side. Currently, Barnes & Noble is estimated to be operating 592 stores. Under Daunt, Barnes & Noble has also refocused on its core book selling business by removing non-book items from stores and empowering local managers to curate inventory based on community interests. The B&N financials and balance sheet may be on the mend as well. Last year, sources told the Financial Times that an IPO for Barnes & Noble is one of a number of options for the future. Interestingly, Elliott Management holds a majority stake in British book retailer Waterstones, which could be part of the IPO mix as well, in theory.
Some of the activist fund’s other top holdings include stakes in Suncor Energy (SU), Johnson Controls (JCI), F5 Networks (FFIV), Alexion Pharmaceuticals, and Marathon Petroleum (MPC).
Reading between the lines
So why does Barnes & Noble still have a pulse? It may be filling a void that Starbucks’ (NASDAQ:SBUX) former CEO Howard Schultz and the company’s marketing described as the “Third Place” or the space that is neither home nor work, but a welcoming environment where individuals can relax, connect, and enjoy the Starbucks experience. Schultz hammered away as that concept as a top priority for years. However, in 2022, Starbucks (SBUX) decided to move away from its “Third Place” business model to emphasize drive-thru, pick-up, and delivery options. While many Starbucks (SBUX) stores have been overwhelmed with mobile pickup traffic, Barnes & Noble has attracted more attention recently as a calmer environment for passing time.