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Barnes Is Slowly But Surely Going Down

Updated on February 19, 2014

Barnes and Nobles, Inc. is one of the most popular book retailers in the United States. In fact, it is the largest company of its kind in the country. Traded as BKS, Barnes and Nobles originated as Hinds & Company when it started in 1917 as a bookstore in New York City. However, it was initially a printing business founded in 1873. The company was started by Clifford Noble, William Barnes, and Charles Barnes. Today, Barnes and Nobles is headquartered in Manhattan, New York City. As of April 2013, the company runs 675 bookstores and 686 college bookstores around the United States as mentioned in Barnes & Noble stock news. Barnes and Nobles manages various products which include Barnes & Noble Booksellers, Nook Media, Doubleday Bookstores, SparkNotes, Sterling Publishing Co., Bookstop, and Scribner’s Bookstores.

As of 2012, the revenue of BKS earnings peaked at $7.129 Billion; its operating income reached $61.303 million; net income of $68.697 million; total assets of $3.765 billion; and total equity of $747 million. It has over 30,000 employees as part of its BKS stock analysis.

Barnes & Noble, Inc. is known to be the best book retailer in the United States. It has upbeat and sophisticated bookstores that not only features books, but also hang-out places by adding Starbucks Coffee. Aside from books, most stores of the company sell newspapers, DVDs, magazines, graphic novels, music, and games. All these are part of BKS estimates.

Barnes & Noble, a troubled company

With all the unprecedented success of the Barnes & Noble stock price, it has begun to decline at the start of 1990s. Due to the lack of interests and the increase of digital publications, bookstores don’t carry the same glitters to readers anymore. Since 1990s, there are many bookstores in the United States that went bankrupt and has to close leaving BKS stock as the only surviving national bookstore in America.

Proposed solutions to avoid bankruptcy

However, the company is not out from trouble yet as there are looming problems that continue to plague Barnes & Noble, something that is being denied by Barnes & Noble stock news. To slow down or stop the decline of the company, they partnered with Microsoft to take on the digital market where most consumers are migrating. This decision is based on the BKS stock analysis.

Another solution that had been seen by Barnes & Noble is cost-cutting. By tightening its belt, the company is able to acquire a quarterly profit of BKS stock price 15 cents per share. In addition to this, the company decreased its investment spending on its Nook products. This seems to be the right decision at this time. Nevertheless, the solution seems to only slow down the inevitable bankruptcy of the company. Because of the massive competition in the retail book market, Barnes & Noble still struggle to keep afloat.

Exaggerated optimism by Barnes & Noble

While it is okay to be optimistic, there are some instances that companies should be realistic at the same time. The reports made by Barnes & Noble stock are truly encouraging, at least on the surface.

The company believes that it will still continue to sustain its quarterly profit and even improve its efficiency to bring the company back on the right track based on Barnes & Noble stock analysis. The company mentions in its report that the BKS stock price will not fall and it will remain competitively as strong as Apple in terms of business prospects. Therefore, the projected annual profit of the company will reach $13.78 in stock valuation.

Realistic evaluation

The optimism of Barnes & Noble might be very encouraging according to BKS stock news, but other statistics and information reveal otherwise. First and foremost, the sales of the company went down from $1.88 billion to $1.73 billion. Of course, this is not only true to Barnes & Noble stock price as the same trend is happening to other bookstores as well. This decrease in profit is the primarily reason book retailers across North America are forced to close. While it is true that the most recent quarter of Barnes & Noble have seen good profit, this does not make up with the massive loss that occurred in the past years.

A simple math will reveal that BKS doesn’t have enough money to cover their liabilities. When one tries to subtract the current inventory of the company from the current assets, one will see that the cashable assets will not be enough to pay off the current debt. Thus, observers can see that Barnes & Noble is slowly, but surely sinking in the financial quicksand of debt.

The company dismisses the idea that it doesn’t have enough BKS stock to pay the debt. It claims that the inventory of books it has should be considered as asset. Of course, this is true based on the technicalities of accounting principles. However, the reality is that unsold books cannot be used to pay operational expenses such as rent, salary, and monthly utility bills.

Biggest problem for Barnes & Noble

There is no doubt that Barnes & Noble stock is still earning enough. It is still a good business that can generate enough income to sustain itself. However, one thing that is really dragging the company down is the Nook. Just last year, according to Barnes & Noble stock analysis, the Nook lost $500 million and this is one weight that can burden the company. While this is very much obvious in the observers’ or maybe Barnes & Noble ’ eyes, the BKS estimates does not exhibit any sign that it will dish out its Nook - maybe because of the Company has already made great investments that it cannot turn its back on the Nook project. Most analysts would agree that Barnes & Noble should get rid of the Nook if it intends to survive the coming fiscal year. Meanwhile, consumers are still showered by the company with the optimistic BKS stock news forecast about the Nook and how it should continue to boost the sales of the company.

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