Dismal fourth quarter sales and earnings will force Barnes and Noble to separate its Nook e-reader and retail operations into two separate public businesses.
To help the company move forward with its new business strategy, the book retailer announced Tuesday that it has engaged Guggenheim Securities, LLC as financial advisors and Cravath, Swaine & Moore LLP as legal counsel, according to company officials.
"In fiscal 2014 we have taken certain actions to strengthen the company, including the ongoing rationalization of the NOOK business, growing the college business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve Retail's sales trends," said Michael Huseby, Barnes and Noble president. The company, which has been struggling financially in the recent past, has yet to set a timetable for when the separation will actually take place
"Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions," Huseby added. "We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation."
Before the company divides into two entities, Barnes and Noble must pass certain regulations, obtain proper financing, tax information, and receive a final sign-off the board of directors. Factor's regarding the world's macroeconomic environment, credit markets, and equity markets will also determine if the change can happen.
"We're pleased with our improved financial performance in fiscal 2014, generating EBITDA of $251 million, the highest it's been in four years, while executing on our strategic initiatives during the year," Huseby stated in reference to Barnes and Noble's financial picture.
