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Barnes & Noble Aims to Grow by Trimming Retail Footprint

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Barnes & Noble Bookseller

Barnes & Noble is learning to do more with less.

After lasting through four straight fiscal years of declining sales, from 2013 through 2016, the company is trying to correct its course. In August, the company ousted CEO Ronald Boire, a move that subsequently postponed the retirement of company founder and executive chairman Leonard Riggio.

During the company’s fiscal first quarter 2017 earnings call, Riggio minced no words in describing what the company is facing.

“The retail environment is not good at this moment,” he said. “It is one of the worst I’ve ever experienced in the 50 years I’ve been in this industry.”

Riggio also acknowledged what he said were critical missteps, including making unprecedented inventory reductions and cutting expenses in the area of retail floor personnel. He said the company is actively working to remedy those conditions, and outlined several strategic steps that Barnes & Noble will be taking to strengthen retail sales.

“We will continue to spend money wisely on initiatives which will build sales and the bottom line,” Riggio said. “We will be smart about what and where we spend, but we intend to grow this business.”

The company is making a number of operational changes. When it comes to real estate expansion, the retailer spun off Barnes & Noble Education in August, the line of business that serves students and faculty members across 770 campus stores across the country.

The education sector is emerging as Barnes & Noble’s main real estate growth area, expanding while the main bookstore chain  pulls back.

A new school of thought for success

At the end of fiscal year 2015, the last period for which complete information is available, there were 724 Barnes & Noble College stores, up from 636 stores in 2011.

At the same time, the regular Barnes & Noble division was shedding stores. It had 648 units at the end of fiscal year 2015, down from 705 stores in 2011. In fiscal 2015, the company reduced the Barnes & Noble store base by approximately 271,000 sq. ft., or 1.6 percent. It did not open any new Barnes & Noble stores that fiscal year.

Barnes & Noble has not yet reported results for the full fiscal 2016, so it is unclear whether the company is continuing its recent trend of closing retail stores.

See the full story at National Real Estate Investor