Two Borders' execs resign; B&N's Nook boosts holidays
The Barnes & Noble nook, a Wireless eBook Reader, is seen during a news conference in New York October 20, 2009.
Credit: Reuters/Shannon Stapleton
By Phil Wahba and Dhanya Skariachan
(Reuters) - Barnes & Noble Inc (BKS.N) reported strong preliminary holiday results at its superstores, led by the popularity of its Nook e-readers, and shares of the top U.S. bookseller gained 9 percent on Monday.
Rival Borders Group Inc (BGP.N), which has been seeking financing to fight credit woes, said on Monday that two top executives resigned. Its shares fell 8 percent after-hours.
Borders has been hurt by an industry-wide decline in sales of physical books and has not developed an e-reader to compete with Amazon's popular Kindle device.
Barnes & Noble said that same-store sales, or sales at superstores open at least 15 months, rose 9.7 percent for the nine-week period ended on January 1.
Barnes & Noble, which put itself up for sale in August, introduced the Nook in 2009 to compete with Amazon.com Inc's (AMZN.O) market-leading Kindle e-reader as it seeks to prove itself viable amid bookbuyers' shift to digital formats.
In the fall, the retailer introduced a well-reviewed, enhanced version of the device, NookColor, which has some functions similar to those of Apple's (AAPL.O) iPad tablet.
Barnes & Noble in November had forecast same-store sales for the entire current quarter, including the holiday period, would rise between 5 and 7 percent.
Barnes & Noble's numbers include Nook devices sold in stores but not on its website. Last week, Barnes & Noble, which operates 717 namesake stores in the United States, said the Nook had become its best-selling single item ever. The retailer said it would release more detailed sales figures on Thursday.
Barnes & Noble stands to win market share from smaller rival Borders, which said last week it would delay payments to some vendors as it seeks to negotiate new loan terms, putting into question publishers' willingness to ship it new books.
According to the Wall Street Journal, Rowman & Littlefield Publishing Group Inc, which publishes its own titles and distributes books for several hundred publishers through its National Book Network, said it would temporarily stop shipping books to Borders.
The New York Times reported that a spokesman for Ingram Book Company, a major book wholesaler, said on Monday the company was still shipping books to Borders.
Last week, Borders said it was delaying payments to some of its vendors, just weeks after the company said it was trying to obtain new financing to avoid violating the terms of its credit agreements early in 2011.
BORDERS' TROUBLES AGGRAVATE
Standard & Poor's analyst Michael Souers downgraded Borders' shares to "sell" from "hold," saying that even if Borders manages to restructure its debt, the new terms would be "onerous."
Souers called Borders' situation "dire" and said its current crisis could benefit Barnes & Noble permanently. He said Borders' lack of a proprietary e-reader was damaging.
"They've been left behind in the whole digital books transformation," Souers told Reuters, noting that Borders' liquidity problems were all the more alarming because they came during the holidays, traditionally booksellers' biggest season.
"We do not comment on outside analysis other than to note that S&P has not spoken with Borders," Borders spokeswoman Mary Davis said in an e-mail to Reuters.
Borders, which saw a number of changes to its upper management in 2010, on Monday said Thomas Carney resigned as executive vice president, general counsel and secretary of the company, while Scott Laverty resigned as senior VP and chief information officer.
"Tom Carney and Scott Laverty resigned for personal reasons," Davis said in an e-mail to Reuters. "As a matter of company policy, we would not disclose those reasons."
In a later e-mail, she added: "Borders is realigning its management structure to meet our business priorities and they resigned to pursue other interests."
Borders has been contending with sharp declines in same-store sales. Comparable sales at Borders' superstores fell 13.7 percent in 2009 and 10.8 percent in 2008.
Barnes & Noble shares, which closed up 9 percent at $15.42, rose slightly to $15.60 in after-hours trading. Borders shares fell 8.3 percent to 88 cents afterhours from its Monday close of 96 cents.
(Reporting by Phil Wahba and Dhanya Skariachan, editing by Dave Zimmerman, Matthew Lewis and Carol Bishopric)
Credit: Reuters (www.reuters.com)
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