Barnes & Noble is a large book retailer with over 600 retail stores and an online presence. It sells books, ebooks, textbooks, movies, music and more. While sales of physical books are declining, Barnes & Noble has positioned itself as a leader in the growing ebook market through its NOOK ebook readers and online store. However, it faces threats from large competitors like Amazon, pressure on pricing, and a challenging retail environment for physical books. Its financial performance has weakened in recent years.

1. Barnes &
Noble, Inc.
A Company and Industry Analysis

2. 2
Index
An Introduction to Barnes & Noble, Inc......................................................................................... 3
Executive Summary .................................................................................................................... 3
Company Overview..................................................................................................................... 3
Address .................................................................................................................................... 3
Contact Information................................................................................................................. 3
CEO ......................................................................................................................................... 3
Ticker Symbol ......................................................................................................................... 3
Primary SIC and NAICS Codes .............................................................................................. 3
Number of Employees ............................................................................................................. 4
An Analysis of Barnes & Noble Inc. .............................................................................................. 4
Company Description.................................................................................................................. 4
Origins ..................................................................................................................................... 4
Retail Stores............................................................................................................................. 4
Barnes & Noble College.......................................................................................................... 4
NOOK...................................................................................................................................... 4
Mission Statement....................................................................................................................... 4
SWOT Analysis........................................................................................................................... 5
Strengths .................................................................................................................................. 5
Weaknesses.............................................................................................................................. 6
Opportunities ........................................................................................................................... 6
Threats ..................................................................................................................................... 7
Sales ............................................................................................................................................ 8
Sales in the Past Fiscal Year.................................................................................................... 8
5 Year Net Income................................................................................................................... 8
Stock............................................................................................................................................ 9
52 Week High.......................................................................................................................... 9
52 Week Low........................................................................................................................... 9
The Bookselling Industry as a Whole............................................................................................. 9
Market Definition........................................................................................................................ 9

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State of Industry.......................................................................................................................... 9
Major Competitors .................................................................................................................... 11
Border’s ................................................................................................................................. 11
Books-A-Million.................................................................................................................... 11
Amazon.................................................................................................................................. 12
Wal-Mart................................................................................................................................ 12
Market Share ............................................................................................................................. 12
Final Statements............................................................................................................................ 12
References..................................................................................................................................... 13
An Introduction to Barnes & Noble, Inc.
Executive Summary
Barnes & Noble is a Fortune 500 company specializing in books and related media. They
stock over a million different titles. They retail fiction, nonfiction, textbooks, magazines, CDs,
media, toys, games, and eBooks. It also purchased the Sterling Publishing Company in 2003. As
of 2009 they also became the leader in eBook sales under their NOOK brand ("Barnes & Noble
Booksellers").
Company Overview
Address
Barnes & Noble, Inc.
122 Fifth Avenue
New York, New York 10011
USA
Contact Information
1-212-633-3300
http://www.barnesandnobleinc.com
CEO
Michael P. Huseby
Ticker Symbol
NYSE:BKS
Primary SIC and NAICS Codes
Book Stores SIC: 5942

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Book Stores NAICS 451211
Number of Employees
34,000 Employees
Barnes & Noble, Inc. (n.d).
An Analysis of Barnes & Noble Inc.
Company Description
Origins
Barnes & Noble began as a second hand book store started by Charles Montgomery
Barnes in Wheaton, Illinois during 1873. Barnes then went into selling textbooks. His son would
later partner with a man named G. Clifford Noble the owner of Nobles & Nobles. Although
Noble would eventually leave the business, the name Barnes & Noble stuck (Pederson, 2006).
Retail Stores
This refers to the brick and mortar stores, online site, and warehouses where Barnes &
Noble sells their physical merchandise. There are over 658 Barnes & Noble bookstores in 50
states ("Barnes & Noble Booksellers", n.d.).
Barnes & Noble College
This encompasses the company’s series of textbooks and related materials. This brand
sells both to individual students and schools. “Barnes & Noble College Booksellers
LLC operates 705 bookstores serving over 5 million students and more than 250,000 faculty
members at colleges and universities across the United States” ("Barnes & Noble Booksellers",
n.d.).
NOOK
Barnes & Noble opened the world’s largest eBook store, now known as the NOOK Store,
in July of 2009. Then in October 2009, they introduced NOOK, the first Android-based eReader.
They have since released many other types of NOOK in addition to the original. Microsoft
currently owns 17.6% equity in the NOOK Media LLC. The Nook Store features over 3 million
eBook titles ("Barnes & Noble Booksellers", n.d.).
Mission Statement
The Barnes & Noble mission statement is an ambitious one:
“Our mission is to operate the best specialty retail business in America, regardless
of the products we sell. Because the product we sell is books, our aspirations must
be consistent with the promise and ideals of the volumes which line our shelves.
To say that our mission exists independent of the product we sell is to demean the
importance and the distinction of being booksellers.

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As booksellers we are determined to be the very best in our business, regardless
of the size, pedigree or inclinations of our competitors. We will continue to bring
our industry nuances of style and approaches to bookselling which are consistent
with our evolving aspirations.
Above all, we expect to be a credit to the communities we serve, a valuable
resource to our customers, and a place where our dedicated booksellers can grow
and prosper. Toward this end we will not only listen to our customers and
booksellers, but embrace the idea that the Company is at their service” (Pederson,
2006).
To summarize the mission statement of Barnes & Noble, the goal is to do right by the books they
sell. They wish to help their customers, encourage growth in the stores, and be a valuable asset to
their communities.
SWOT Analysis
Strengths Weaknesses
Low prices appealing to customers
Broad product portfolio
Strong presences in e-content market
Costly involvement in several legal cases
Reliance on a few suppliers
Opportunities Threats
eBook market expanding
Reliable market in college textbooks
Increasing cost of labor in U.S.
Digital piracy
Competition for lowest price is driving down
growth opportunities
(Barnes & Noble, Inc. SWOT Analysis, 2014)
Strengths
Strong presence in the e-content market
The selling of physical books in the United States through brick and mortar stores has
slowed incredibly in the past few years. Many booksellers are closing their doors and giving up.
There was fear that the growing popularity of eBooks would impact physical sales further and
Barnes & Noble was initially hesitant to take the risk. However, despite their concerns Barnes &
Noble did the opposite and doubled down on its online retail and threw themselves to the
forefront of the e-content market. Barnes & Noble first delved into the electronic book market
through their 2009 acquisition of the e-retail service Fictionwise. They currently offer over three
million unique eBook titles. These are available on many electronic devices including Barnes &
Noble’s own NOOK tablet. The NOOK is the first Android based eReader. Barnes & Noble now
has a large consumer base in the online market (Barnes & Noble, Inc. SWOT Analysis, 2014).
Discount pricing to attract price sensitive customers
Barnes & Noble has lower pricing on its merchandise and is able to attract hesitant
customers with its competitive pricing. This also encourages mid range consumers to purchase
more than they usually would due to deep discounts. Barnes & Noble is able to offer these prices
because it has such a large consumer base and market appeal. This lets them negotiate with

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publishers for cheaper pricing and pass that on to the consumer. They retail books at 30% less
than the suggested price for hardcover bestsellers. Another way that they allow customers to save
is through their membership program. There is a small fee of $25 a year in exchange for 10% off
selected merchandise and 40% off of hardcover bestsellers. Membership also entitles people to
unlimited speedy shipping through the company’s website and information on promotions.
Making these benefits available to customers attracts new consumers while encouraging more
purchases by existing customers. (Barnes & Noble, Inc. SWOT Analysis, 2014).
Broad product portfolio
Barnes & Noble offers a wide array of products and services that has given it a stability
that other, less diversified companies lack. They sell a wide array of products: children’s books,
bestsellers, newspapers, magazines, music, paperbacks, hardback books, toys, board games,
gifts, bargain books, eBooks, textbooks, school supplies, café items, and movies. All of these are
offered both in its physical retail stores and online through the company’s website. There are also
textbook rental services available. Barnes & Noble also has an extensive eBook collection of
over three million that it continues to expand. Barnes & Noble addresses a large range of
customers and their individual needs. The company does not rely on a single product or market
and it gives them stability in case of a loss in one area or another (Barnes & Noble, Inc. SWOT
Analysis, 2014).
Weaknesses
Involvement in several legal proceedings
Barnes & Noble has been involved in several very costly legal proceedings that have cut
considerably into its already dismal profit margin. The cases are mainly about claims that the
NOOK distribution in the US has infringed on other’s patents. Barnes & Noble lost one such
case in 2011 to Microsoft and is currently involved in another as of June 2012. The involvement
in these legal cases do not make the company look good and have a high monetary cost. This
could affect branding (Barnes & Noble, Inc. SWOT Analysis, 2014).
Dependence on few suppliers
Barnes & Noble relies almost exclusively on a few key suppliers for the majority of their
products. Barnes & Noble has not locked into agreements with most of its suppliers. This may
result in loss of access to products, credit, or prices. Due to the instability that the lack of long
term contract creates, if friction were to occur with a supplier, Barnes & Noble may be put in a
bad position. (Barnes & Noble, Inc. SWOT Analysis, 2014).
Opportunities
Growing eBooks market
Barnes & Noble has been on the forefront of the eBook market since its inception. They
have aggressively pursued investment in digital media. It seems to be paying off for them as the
eBook market continues to expand. Digital book sales now account for a total of twenty percent
of the total book market. The NOOK is one of the first and has become a mainstay of eReader
technology. Barnes & Noble became involved in the eRetail market through their acquisition of

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the company Fictionwise, who was a leader in the eBook market. Through their eBookstore
Barnes & Noble is able to offer more than three million eBook, magazine, and newspaper titles.
The sale of eBooks grew by 45% in 2012 compared to the prior year. In contrast, print
merchandise sales remained the same during the same time period. Barnes & Noble will benefit
from the increasing eBook market by taking advantage of its prominent position (Barnes &
Noble, Inc. SWOT Analysis, 2014).”
College textbooks market is a stable growth area with emerging opportunities
The college textbook market is a reliable one that Barnes & Noble can work to increase
its presence in. College textbooks are associated with high spending. According to estimates in
the industry, the average student will spend $1,100 on textbooks in a given school year.
Additionally studies suggest that more than 50% of schools operate their own textbook stores
and loose money doing it. Barnes & Noble therefore has a unique opportunity to intervene by
contracting themselves out to these schools. In 2009 Barnes & Noble acquired B&N College and
is currently one of the largest contractors for school bookstores. In 2010 they also opened up a
book rental section that has taken off. e-textbooks could also be a profitable enterprise as they
are already taking the place of many physical textbooks. Barnes & Noble currently has a
program called NOOKStudy which is an online reading and studying platform downloadable for
both Mac and Windows computers. It also allows students to download e-textbooks and is
compatible with all NOOK books. Barnes & Noble now has a hand in every market involved and
should be able to pull it all together to create an opportunity for growth (Barnes & Noble, Inc.
SWOT Analysis, 2014).
Blu-ray technology provides opportunities for growth in home entertainment market
Blu-ray is a fast growing segment of home entertainment technology. Customer spending
increased 15% in 2013 even though the general home entertainment market increased by much
less. The company is wise to diversify their non-book sales as they make up a significant portion
of sales (Barnes & Noble, Inc. SWOT Analysis, 2014).
Threats
Competition and price wars are denting the growth opportunities
Competition is growing in all directions. Physical book sales are threatened by the
increase in untraditional book sellers such as Amazon.com and Wal-Mart. A significant portion
of book sales in the US involve stores that have not traditionally had a lot of book sales such as
drug stores, Sam’s club, and Wal-Mart. These stores compete for the lowest price and hedge on
convenience. While Barnes & Noble is much more popular, they have little control over their
pricing.
The bigger threat lies in digital sales with Amazon being the prime competitor. The
Kindle has a very broad distribution and may overshadow Barnes & Noble’s NOOK. Sony,
Barnes & Noble, and Amazon are all competing to sell eReaders and Barnes & Noble has cut
prices in order to compete. In order to stay relevant Barnes & Noble will have to compete with
many multipurpose devices such as tablets, netbooks, and smart phones. Growing price pressure
will drive down profits (Barnes & Noble, Inc. SWOT Analysis, 2014).

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Growing problem of digital piracy
As digital markets increase, so too will digital piracy. Never underestimate a person’s
desire not to pay for goods and services. Barnes & Noble will have to compete with both fake
sites that trick customers by posing as the retailer and sharing sites that outright allow people to
illegally trade files. According to a survey one third of college students admitted to have pirated
copies of course material in the spring 2013 semester. The piracy rate for US eBooks is 12%.
Every illegal download is a sale that the company looses out on (Barnes & Noble, Inc. SWOT
Analysis, 2014).
Rising labor wages in the US
Labor costs in the United States have been rising over the years and with the new
proposed minimum wage of $10.10 catching hold that trend will only increase. Minimum wage
was $5.15 in 1998 and is currently $7.25 and increase of $2.10 an hour. Moreover, the minimum
wage varies state by state and is even higher in some places. Barnes & Noble employs over
34,000 people and all of them need to be paid for their time. Increasing wages will cut into
Barnes & Noble’s bottom line (Barnes & Noble, Inc. SWOT Analysis, 2014).
Sales
Sales in the Past Fiscal Year
For the past fiscal year Barnes & Noble reported revenues of $6,839 million in the past
fiscal year ended in April 2013 also stated as FY2013. This is a 4.1% decrease compared to the
FY2012. The company’s operating loss more than quadrupled coming in at $220 million in the
FY2013 as opposed to $54.6 million in $2012. Barnes & Noble’s net loss also had a sharp
uptick, it swelled from $64.8 million in FY2012 to $157.8 million in FY2013 (Barnes & Noble,
Inc. SWOT Analysis, 2014).
5 Year Net Income
$ in Millions 2009 2010 2011 2012 2013
Net Income (11.0) 37.0 (74.0) (69.0) (158.0)
(Book Industry Profile, 2014)

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(Book Industry Profile, 2014)
Stock
52 Week High
$22.82
52 Week Low
$22.56
The Bookselling Industry as a Whole
Market Definition
The bookselling industry can be split into two primary segments. First there are physical
books includes all monographs including but not limited to dictionaries, maps, musical scores,
non-fiction, fiction, atlases, textbooks, and encyclopedias. In contrast the market’s digital portion
is known only as eBooks which are electronic versions of the above and can be read on a tablet,
phone, computer, or other devices (Book Industry Profile, 2014).
State of Industry
The book market in the United States has grown in 2013 by a pitiful 0.6% and has
reached a total of $27.3 billion. The book market in the US shrank slightly in 2012 and stalled in
2013. Prior performance has been a mixed bag in the preceding few years. The market is
predicted to decay slightly and China is predicted to overtake the market in the US as the largest
book market (Book Industry Profile, 2014).
The US books market had total revenues of $27.3billion in 2013. This is up slightly from
the previous two years, but not nearly close to what it was in 2010. The forecast for the US book

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market is not looking good either. It is predicted to spiral downward to a dismal $5 billion by the
year 2018.
(Book Industry Profile, 2014)
The shift toward digital sales continued as physical book sales account for 80% of the
overall book selling market while digital sales account for 20% of the market in 2013 (Book
Industry Profile, 2014).

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(Book Industry Profile, 2014)
Major Competitors
Border’s
For many years Boarder’s was Barnes & Noble’s main competitor. However, after many
years of increasing loss it was forced to file bankruptcy, liquidate its assets, and close its stores in
2011. Barnes & Noble then acquired its trademark.
Books-A-Million
Books-A-Million poses no serious threat to Barnes & Noble. It operates mainly in the
Eastern United States and has little access to the market in the rest of the country outside of its
online store. Books-A-Million operates only 200 superstores and 61 bookstores throughout the
country. It had a net loss of 3 million dollars in the last fiscal year. In the past year its stocks
have retailed for at most $2.58/share. Barnes & Noble made 13.5 times more revenue in the past
year. ("Books-A-Million, Inc.", n.d.)

12. 12
Amazon
Amazon represents the main competition for both physical books, eReaders, and eBooks.
Amazon’s Kindle is the equivalent to the NOOK. Because Amazon operates completely online it
has access to a larger base of customers than Barnes & Noble does.
Wal-Mart
Wal-Mart is the single largest retail company in the world. It had a net income of
16,999.0 million in the last fiscal year. However, in regard to the book selling market, it has a
limited selection in its stores and carries neither the breadth nor depth that Barnes & Noble and
Amazon do.
Market Share
 Barnes & Noble currently holds a 20% share of the newsstand market on the digital
platform.
 Barnes & Noble holds a 20% share of the U.S. eBook market based on data received
from the major publishers (as of February 2014).
 It is the second biggest retailer of magazines in America, it currently carries about
5,500 magazine titles and almost 1,000 different newspapers.
 Barnes & Noble College operates more than 700 campus bookstores, they currently have
25% of the United States higher education student and faculty patronage”
("Barnes & Noble Booksellers", n.d.)
Final Statements
Barnes & Noble has had a few bad years. The US book selling market has as well. The
company has not had good sales. However, it is still a leader in the market and with any luck will
be able to recover from its recent economic situation. It fills a need in many communities as
bookstores become less and less available. While Barnes & Noble is not a recommended
economic investment at the moment, do not count it out of the game.

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References
About Barnes & Noble.com. (n.d.). Retrieved October 28, 2014, from
http://www.barnesandnoble.com/help/cds2.asp?PID=8184
Barnes & Noble. (2006). In J. Pederson (Ed.), International directory of company history (Vol.
75, pp. 50-55). Detroit, Michigan: Thompson Gale.
Barnes & Noble Booksellers. (n.d.). Retrieved November 14, 2014, from
http://www.barnesandnobleinc.com/our_company/our_company.html
"Barnes & Noble, Inc." (n.d.): MarketLine Company Profiles Authority. Web. 14 Nov. 2014.
Barnes & Noble, Inc. SWOT Analysis. (2014). Barnes & Noble, Inc. SWOT Analysis, 1-10.
Books-A-Million, Inc. (n.d.). Retrieved November 16, 2014, from
http://www.mergentonline.com//companydetail.php?compnumber=74519
Books Industry Profile: the United States. (2014). Books Industry Profile: United States, 1-31.