B&N Posts Updated Prospectus for B&N Education Spin-Off Spin-Off

2065057877_4cb9ddbb5c_bSome four months have passed since B&N announced plans to spin off its college stores into a separately owned company called B&N Education.

There has not been much news to report on the topic since then, but Shelf Awareness noticed this week that Barnes & Noble filed an updated prospectus with the SEC.

The short version is that B&N is still pushing forward, the new company will be owned by the same stockholders as B&N, and the same people named in February are still going to be running B&N Education. Also, B&N has picked up 3 additional contracts to run college stores (717 stores in total).

If you want to read it, SA detailed the prospectus at length. I was going to write it up myself, but a spot check of the older copies of the prospectus doesn't show many significant differences.

There are a few financial details worth noting:

In its most recent fiscal year, ended May 3, 2014, B&N Education revenue slipped 0.9%, to $1.747 billion, and net earnings rose 16.3%, to $35.1 million. In the first three months of the current fiscal year, ended January 31, revenues rose 3.6%, to $1.5 billion, and net earnings fell 43.8%, to $19.4 million.

Sales at stores open at least a year fell 0.7%, affected by an increase in textbook rentals, which was partly offset by stronger emblematic apparel sales.

As of the end of January, B&N Education operated 717 stores, which reach 24% of the total number of college students in the U.S.--about five million students. The company has 455 contracts to operate the stores, some of which cover multiple locations, and 158 of the stores are co-branded with the Barnes & Noble name. B&N Education estimates that its 717 stores are 16% of the number of college stores run nationwide.

The prospectus is highly optimistic as to the new company's prospects.

I, on the other hand, can see that B&N Education faces strong competition in a declining market. It's not just that students are buying less from their college bookstores, or that B&N Education's digital textbook offering is a train wreck, but also that it has a couple established competitors (Follett, Nebraska Book Co) as well as an aggressive newcomer with extensive retail experience and a kill-all-the-prisoners attitude.

Amazon is aggressively soliciting colleges to let it run a virtual bookstore on campus (like the one at Purdue University). They only run a few stores at the moment but as B&N reported in its prospectus the market is wide open. According to B&N, 53% colleges still run their own bookstores. While that is a prime opportunity for B&N, it's also fertile field for Amazon.

image by brewbooks

About Nate Hoffelder (11591 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

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