Barnes and Noble Education Spins Off into Separate Company

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Instead of parting with its college bookstore business, Barnes and Noble has decided to turn it into a separate publicly traded company which will be known as Barnes and Noble Education.

Michael J. de la Merced writes for The New York Times that in an effort to stabilize its business, over the last year the company has brought back stakes in its struggling Nook business owned by Microsoft and the education publisher Pearson as part of the planned spin-off of the education division. But now Barnes and Noble will keep the Nook business and add the college bookstore unit, which happens to be its best-performing unit.

Since November 1, the division has reported $10.7 million in profit and $977.4 million in sales, relays a prospectus published last week. The core retail division  announced $1.8 billion in sales while Nook had a sales total of $133.9 million during the same period.

“Separating Barnes & Noble Education will create an industry-leading, pure-play public company with more flexibility to pursue strategic opportunities in the growing educational services markets,” Michael P. Huseby, the bookseller’s chief executive, said in a statement.

However, Amazon has been vying for the college bookstore market and posing a threat to Barnes and Noble’s lead position in the $10.3 billion market. In a new initiative with Purdue University, Amazon will include a staffed delivery center on campus where Amazon deliveries can be picked up and rented textbooks can be returned. Amazon also offers next-day delivery on textbooks and course materials along with a deep student discount for those who have Student Amazon Prime memberships, costing only $49 a year.

MarketWatch’s Trey Williams writes that according to the National Association of College Stores, college students paid an average of $313 for required course materials in 2014. At this time, Barnes and Noble has more than 700 university stores nationwide.

The trend apparently, over the past 10 years, is for students to rent books, buy used books, go digital, or do away with books entirely. Richard Andrade, founder of BarristerBooks.com, explains that the internet has disrupted the choke-hold college bookstores held on the market. He adds that the used-book idea should be examined by campus bookstores and textbook publishers.

“The more expensive you make the books, the more you’re making people look for other alternatives, and that could be renting, buying used — which has become huge — or going digital,” Andrade said. “It’s tougher to scrap out the living you used to make, and I don’t see that getting any easier.”

Maggie McGrath of Forbes writes that in its prospectus, Barnes and Nobles Education said:

“The opportunities and challenges we expect to arise in the immediate future of the Barnes & Noble retail business differ markedly from those of our business. For Barnes & Noble, increasing foot traffic in existing locations, adapting offerings to shifting consumer tastes and patterns and harmonizing the in-store, online and digital experiences will require a fully engaged board of directors and management team that has a different skill set and experience than those required to execute our goals and strategic initiatives. We believe the spin-off will enhance the ability of Barnes & Noble and [us] to focus on [our] respective strategies.”