Thursday, May 22, 2008

Barnes & Noble reports 1Q loss, might acquire Borders; would Amazon take over website too?

This does not seem to be a good time for booksellers. Reuters reports today that Barnes and Noble is reporting a first quarter loss, partly because of an accounting charge. It’s not clear how the financial results split between the plush retail stores and the enormous website, which is very efficient. There is also a report that Barnes and Noble may acquire Borders, which may want to be acquired.

The Reuters story link is here and it was displayed today through the Finance page on Yahoo!. the same day of alarming reports about oil prices.

Increasing gasoline and food prices (call it inflation or stagflation) are affecting discretionary spending for books and DVDs by many families, especially those with children or dependents.

Borders teams with for its online store. It was not clear how a merger would affect stores, but obviously some would close. It would also seem possible that amazon would eventually control the entire web operation.

Barnes and Noble has a strategic alliance with iUniverse, which provides “supported self-publishing” (or “cooperative publishing”) through print-on-demand, which eliminates the cost of large inventories. It is not clear from the report how well the self-publishing support business is doing, or how it could be affected in the future if the two major retailers merge.

BooksaMillion, Powells, and other booksellers do not appear to be affected by any of these reports yet.

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