New York City based beleaguered book retailer Barnes & Noble announced this week that its board has given the company approval to separate its retail and Nook Media businesses to optimize shareholder value. The move separates the former rising star of the Private Brand e-reader market and its content division from the retailer.
The move is the latest twist for the Private Brand, which at one point made up close to a quarter of all e-readers. Barnes & Noble brought in Microsoft in $300 million investment that gave the software giant a 17.6% stake in the private brand.
“In fiscal 2014 we have taken certain actions to strengthen the company, including the ongoing rationalization of the Nook business, growing the college business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve retail’s sales trends,” said CEO Michael P. Huseby. “Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions. 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.”
The move to separate from its Nook business, which reportedly sent shares up about 9%, came as the company reported fourth-quarter results for the period ended May 3. The company narrowed its net loss to $36.7 million from $114.8 million for the prior-year quarter. Revenue increased 3.5% to $1.3 billion.
“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 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.”