Is Books-A-Million going to follow Borders into bankruptcy?

Last month it was announced that Books-A-Million agreed to acquire lease interest in 14 of Borders stores for $934,209. Yet last week GalleyCat reported that Books-A-Million will close four outlets. Add to it 11 percent decrease in sales in the last quarter and you start wondering not only if Books-A-Million made the right decision buying Borders' stores, but also if they're actually able to stay in business or will follow Borders into bankruptcy.

I looked into it and found five signs that Books-A-Million, now the second-largest bookseller might be heading into trouble:

1. Sales are shrinking - Last month the company reported on its second quarter results:  

"Net sales for the 13-week period ended July 30, 2011 decreased 11.4% to $106.4 million from net sales of $120.0 million in the year-earlier period. Comparable store sales for the second quarter declined 12.9% compared with the 13-week period in the prior year. Net loss for the second quarter was $2.9 million, or $0.18 per diluted share, compared with net income of $1.9 million, or $0.12 per diluted share, in the year-earlier period.

For the 26-week period ended July 30, 2011, net sales decreased 11.2% to $210.4 million from net sales of $237.0 million in the year-earlier period. Comparable store sales declined 13.1% compared with the same period in the prior year." 

Why? Commenting on the results, Clyde B. Anderson, Chairman, President and Chief Executive Officer, said, "Results for the quarter reflect a continuation of the trends that have been affecting our business since the beginning of the year. A soft publishing lineup, the effect of e-book migration and the impact of Border's liquidation all contributed to the decline in comparable store sales. In this environment we have been focused on further developing the growth categories in our stores in preparation for the second half of the year while our balance sheet remains strong."

What are exactly the "growth categories" they focus on further developing? It's not clear. Somehow I find this explanation as well as action plan not very reassuring to say the least.

2. Cash reserves are down by almost 40% - Although CEO Anderson said "balance sheet remains strong", you see that cash is down by 38% compared to the end of January 2011. The company has now only 4.8 million in cash and almost 95% of its assets are in its inventory ($192.3 million out of total current assets of $203.7 million) - again, not very relaxing given the fast changes the book business is experiencing. 

3. The stock market does not believe in Books-A-Million - If you had $300 on January 1, 2011 and decided to invest $100 in Amazon, $100 in Barnes and Noble and $100 in Books--Million, your investments would generate you the following return as of yesterday:

	1/3/2011	9/9/2011	Return
Amazon	184.22	211.39	14.75%
B&N	15.42	11.38	-26.20%
Books-A-Million	5.86	2.6	-55.63%

The company in its latest annual report explains that "recent market volatility has exerted downward pressure on our stock price, which may make it more difficult for us to raise additional capital in the future."

4. No clear strategy for the brick and mortar stores - Books-A-Million presently operates 232 stores in 23 states and the District of Columbia. Just like with B&N it's not clear what's company's strategy to transform these stores back into an asset. The vast majority of the company's revenues come from bookstores and therefore lack of clear strategy is creating a risk and puts in question the company's ability to increase its sales.

5. No e-reader - Just like Borders, Books-A-Million didn't develop an e-reader of its own and sells B&N's Nook. It means the company is more limited in growing its digital sales and is very much depended on B&N and their success to keep developing the Nook. Bottom line: Books-A-Million does not have the same digital cushion B&N has.

I hope I'm wrong, but Books-A-Million seems to be vulnerable now. If they won't be able to find the right strategy for their brick and mortar business they can be very soon in the same position  Borders found itself not too long ago.

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant trees for your books!

My article on Triple Pundit on how Allstate reduced its paper use, saving both trees and money

Here's an update on a new article I published today on Triple Pundit on Allstate's achievement to cut its paper use internally by 41 percent and externally (customer focused reductions by eliminating unnecessary customer bill documents for example) by 12 percent, saving not just many trees but also a lot of money!

The article is entitled "Allstate Cutting Paper Use Drastically, Saving Both Trees and Money". Here's the first paragraph of the article: 

The insurance company Allstate uses a lot of paper – in 2009 it used approximately 3.7 billion sheets, equal to approximately 450,000 trees. So it’s not surprising that the company identified paper reduction as one of its top environmental priorities, setting a goal of reducing overall office paper use by 25 percent by 2010. In their latest CSR report, which was released earlier this week, Allstate is revealing that it actually did much better, reducing its office paper use last year by 41 percent.

To read the full article go to http://www.triplepundit.com/2011/09/allstate-cutting-paper-drastically-saving-both-trees-money/


Links to other articles I wrote for Triple Pundit can be found at http://www.triplepundit.com/author/raz-godelnik/

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant trees for your books!

Is Amazon killing independent bookstores by not collecting sales tax? Not really..

After reading on David Streitfeld's article on the New York Times on Amazon's efforts to avoid collecting sales tax in California (as well as other states), I was thinking about the importance of this refusal on independent bookstores.

The problem? "Any Californian who buys a book or a DVD player from Amazon is supposed to pay a use tax when filing state taxes. In practice, however, few do." And Bill Dombrowski, head of the California Retailers Association, adds "Amazon is killing our business in bricks-and-mortar stores."

I believe Amazon's refusal to collect sales tax is wrong and immoral, but is it really killing indie bookstores? I decided to check it out.

I heard yesterday a great book review of Maureen Corrigan on "The Submission" by Amy Waldman and decided to check what happens if I live in Novato, California and want to purchase this book. For my unscientific experiment I compared an online order from three independent bookstores located in San Francisco (The Booksmith, City Lights Books, Green Apple Bookstore) and an online order from Amazon.

	Amazon	City Lights	Booksmith	Green Apple
Book price	13.68	26	26	27
Shipping	3.99	10	8	5.9
Tax	0	2.21	2.21	2.3
Total	17.67	38.21	36.21	35.2
Sales tax as part of the difference between the store and Amazon:
		11%	12%	13%

Bottom line: What kills indie bookstores is the fact that Amazon sells books in half price and provides much cheaper shipping. Not the sales tax. Even if Amazon will start paying sales tax tomorrow (and they definitely should), indie books are still going to be in trouble with such a difference in costs.

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant a tree for every book you read!

The new book Ligeia/Bryndt has joined the 100 trees Project!

If you like books about journeys, both inner and outer ones, you should take a look in the new book Ligeia/Bryndt by Silas Jackson and Juilan Traas, which follows the inner and outer journeys of two unlikely companions, who are bound to each other by an immutable destiny they cannot understand.

We're also happy to update you that this great book has just joined the "100 Trees Project"!

This joint program was launched by Infinity Publishing, a leading self-publishing company together with Eco-Libris to promote environmental sustainability among its authors. Through the program, authors that publish with Infinity are able to plant 100 trees for the title they publish. These authors also have the option to add a special "100 trees planted for this book" logo to their book's design, as a way to showcase their commitment to environmental sustainability.

What's this book is about? Ligeia/Bryndt follows the inner and outer journeys of two unlikely companions, who are bound to each other by an immutable destiny they cannot understand. One, an elfin priestess, has suffered unspeakable atrocities at the hands of humanity. Her heart torn asunder by profound inner conflict, Ligeia seeks to balance the peaceful ideals of her clement, harmless teachers against the seething rage which fills her. The other, a human warrior, has been exiled from his own land. He bitterly regrets the things he has done, yet sees no way to be redeemed.

About the authors:

Silas D. L. Jackson - Silas D. L. Jackson lives in the quaint New England home he was born in, beside a tranquil lake. He derives most of his inspiration from his study of Yoga, where he contorts his body just so, in a room just super-heated enough, as to spark hallucinations about interesting characters and fantastical storylines.

Julian R. Traas - Julian R. Traas was born in France. Buffeted between continents throughout his formative years, he landed just north of Atlanta, Georgia. A trilingual college student trapped in the attempt to take life less than seriously, Julian’s true love is writing.

'Ligeia/Bryndt is available for sale on Infinity's website.

Other books on the "100 Trees Project":

My Name is Grace

The Last Original Idea: A Cynic's View to Internet Marketing

Buffalo on the Ridge by Deanna Meyer

What Love Is...A-Z by by Elle Febbo

Raven Wings and 13 More Twisted Tales

Ishift- Innovation Shift

Good Management is Not Firefighting

Play on Words

This is Your Brain on God

DRIVEN! Remembrance, Reflection, & Revelation

X-POSED: The Painful Truth Behind Yoga & Pilates

Last Male Born: Revenge

Reduced Load Ballistics Research Manual

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant a tree for every book you read!

The rise of ebooks and the consequent fall of paperbacks

Julie Bosman had an interesting article yesterday on the New York Times on the falling sales of paperbacks, which is actually more on the rise of ebooks and the consequent fall of paperbacks.

She writes there:

"A comprehensive survey released last month by the Association of American Publishers and the Book Industry Study Group revealed that while the publishing industry had expanded over all, publishers’ mass-market paperback sales had fallen 14 percent since 2008."

Why? David Gernert, a literary agent whose clients include John Grisham, a perennial best seller in mass market, explains on the article that “e-books have bitten a big chunk out of it”and Matthew Shear, the executive vice president and publisher of St. Martin’s Press adds “in some ways, the e-book is yesterday’s mass market.”

Is it a bad or good trend? I actually think this is the wrong question. Even if e-books are not responsible for 100 percent of the fall of he paperback sales, I guess their rise as a convenient and cheap alternative makes paperback books a less valuable option and therefore a product less people want to purchase.

Although some people in the book industry, like Michael Connelly, the best-selling mystery writer best known for “The Lincoln Lawyer,” are worried of this trend and afraid that "book buyers would not be able to discover new authors very easily if mass-market paperbacks continued to be phased out," I think they'll find out that the electronic format, coupled with more online presence of authors and publishers, actually has the potential to increase the exposure of book buyers to new authors and not reduce it.

So what would you read this Labor Day - would it be a paperback or an ebook? Or maybe both? Feel free to share your choice with us.

Image credit: umpcportal, Flickr Creative Commons

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant trees for your books!

My article on Triple Pundit on the latest raid on Gibson Guitars

Here's an update on a new article I published today on Triple Pundit on lat week's raid on Gibson Guitars, the second one in two years, following suspicions the company violated the Lacey Act.

The article is entitled "Is Gibson Guitars Unfairly Bullied or Have They Really Screwed Up… Again?". Here's the first paragraph of the article:

Last week, for the second time in two years, federal agents raided the facilities of Gibson Guitars, probably the most well-known guitar maker around the world. Although the two raids are the result of different cases, the accusations then and now are similar – violations of the Lacey Act, a law requiring that all wood products and plants imported into the U.S. come from legal sources.

To read the full article go to http://www.triplepundit.com/2011/08/gibson-guitars-wood-lacey-act/

Links to other articles I wrote for Triple Pundit can be found at http://www.triplepundit.com/author/raz-godelnik/

Image credit: jacksonpe, Flickr Creative Commons

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant trees for your books!

Five signs Barnes and Noble is heading for bankruptcy following its latest quarterly report

Barnes & Noble released today its results for the last quarter, ending July 30, 2011. Although B&N's price went up almost 15% following the release of the quarterly report, I see in this report many signs that worry me, as they indicate the company is on its way to bankruptcy, just like Borders.

Here are the most prominent signs:

1. B&N doesn't have a strategy to transform its brick and mortar bookstores from a liability back into an asset and as a result sales continue to decline - "Revenue in stores open at least one year, a key indicator of a retailer's health, fell 1.6% at regular stores and 1.8% at college bookstores." (Reuters).

2. The Nook itself won't save the company - "Sales of the Nook group of devices, which includes a standalone as well as a touch-screen reader, rose 140 percent to $277 million in the quarter..Barnes & Noble Inc forecast sales of its Nook e-reader and e-books would more than double this fiscal year to $1.8 billion".

According to Reuters, "if the Nook and the e-books sales it generates live up to Barnes & Noble's expectations, they would account for a quarter of the chain's sales and all of its growth." Not only that putting all the bets only on the Nook is a risky move, but even if it will succeed the company still have 75% of business in trouble. The Nook itself just won't save the company, no matter how well it will perform.

3. B&N seems to think only about the short term, ignoring the long-term - "Barnes & Noble says it expects to get a lift in sales of $150 million to $200 million after Borders, which declared bankruptcy in February and said it would liquidate in July, completes liquidation sales and closes."We're convinced this holiday will be the biggest traffic we've had in the stores over five years," Lynch said in a call with analysts." (USATODAY.com) - What will happen after this holiday season and after some Borders' customers will switch to B&N? Lynch has no answer.

4. The stores become a burden on BN.com - "revenue from the website rose 37%, driven by sales of Barnes & Noble's Nook Color and Nook Simple Touch Reader, and digital content." (USATODAY.com). The success of BN.com only demonstrates the weakness of B&N's brick and mortrar stores, which are still the core business of B&N.

5. When toys are your best idea to promote sales in stores you're in trouble - "While traditional physical book sales declined during the quarter, the stores posted large increases in sales of the NOOK product line and Toys & Games." Yet, the stores to remind you are still losing, which means that increasing toys sales do not compensate for declining books sales in the stores. Next idea, please.

And finally, did I mention that there is no buyer to the company? If the picture is so rosy as CEO Lynch presents it, how come no one wants to buy the company and enjoy the fruits of the we-invest-only-in-the-Nook strategy? Maybe it's not as brilliant strategy as B&N wants us to believe?

You can check our updates on Barnes and Noble Bankruptcy Index on our website.

You can also find more resources on the future of bookstores on our website at www.ecolibris.net/bookstores_future.asp

Yours,
Raz @ Eco-Libris

Eco-Libris: Plant a tree for every book you buy!