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Wednesday, June 25, 2014
Barnes & Noble to Separate Retail and NOOK Media Businesses
Book retailer Barnes & Noble said Wednesday it would spin off its Nook division, which produces tablets and digital books, amid ongoing losses at the unit.
The company's Board of Directors has authorized management of the company to take steps to separate the Barnes & Noble Retail and NOOK Media businesses into two separate public companies. The company's objective is to complete the separation by the end of the first quarter of next calendar year.
"Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions," said Michael P. Huseby, Chief Executive Officer of Barnes & Noble. "We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation."
Barnes & Noble, also today reported sales and earnings for its fiscal 2014 fourth quarter and full-year ended May 3, 2014.
The company announced a net loss of $36.7 million in its fiscal fourth quarter, narrowing the deficit from $114.8 million a year earlier. This was helped by a $12.5 million one-time tax benefit.
Revenues in the period increased 3.5 percent to $1.3 billion.
But the results were dragged down by weak performance in the Nook division, which saw a 22.2 percent drop in revenues and an operating loss of $56 million. That off-set improvements in the company's retail and university operations.
"We're pleased with our improved financial performance in fiscal 2014, generating EBITDA of $251 million, the highest it's been in four years, while executing on our strategic initiatives during the year," said Mr. Huseby. "Retail improved sales trends during the second half of the year, generating annual EBITDA of $354 million. College increased revenues from higher margin textbook rentals, continued to add new school contracts and developed and soft-launched Yuzu, our digital education platform, growing EBITDA to $115 million. At NOOK, we executed on our plan to sell through existing device inventory, implemented cost rationalization plans, began to pivot our strategy from device focused initiatives to a content centric approach with the signing of our partnership with Samsung, all while significantly reducing year-over-year losses."