Gone with the wind
Barnes & Noble, Inc. (NYSE:BKS) didn’t start selling books online until 1996, at least a year after Amazon.com, Inc. (NASDAQ:AMZN) started, and its Nook was introduced long after the Kindle. It got a free pass when competitor Borders went out of business and another life preserver from Microsoft and Pearson until they gave it up and called it a day for the Nook tablet (they will still sell the basic b/w e-reader and a partner will make the Nook Color reader).
Unfortunately, for Barnes & Noble, Inc. (NYSE:BKS), it has been a day late and $2.31 short (its latest quarterly net loss per share). No wonder the short interest stands at 17.60%.
Reports have circulated, mainly from The New York Times, that Barnes & Noble, Inc. (NYSE:BKS) is selling more high margin tchotchkes (gift items), becoming a Hallmark/Starbucks mash-up as the relevance of its 675 bookstores diminishes day by day.
Its last best hopes are a metamorphosis into a literary gift shop and its 686 college bookstores with high margin textbooks. (Now, there’s a racket that’s profitable!).
Although the stock has managed to rise 12% this last year, it is as speculative as any biotech now and in danger of being remaindered (selling on the cheap). As Belle Watling said in Gone With The Wind, “It don’t pleasure me none to say it,” because every bookstore that closes breaks my heart a little, but the stores may go the way of Borders if the chart below is any indication.
BKS Gross Profit Margin Quarterly data by YCharts
Is Amazon still a best buy?
As a July 4 article in The New York Times explained Amazon’s dominant position in book sales, “It is an achievement built on superior customer service (my italics), a vast range of titles and, most of all, rock-bottom prices that no physical store could hope to match.”
The same argument goes for the rest of its e-commerce empire. Best Buy and Barnes & Noble, Inc. (NYSE:BKS) will remain challenged at best. I think Amazon.com, Inc. (NASDAQ:AMZN)’s excellent customer service and its commitment to offer the best prices to its customers will help it finally grow margins and profits.
As long as an empty chair remains at Amazon meetings, you can continue to invest in Amazon.
The article The Value of the Empty Chair Versus the Empty Suit originally appeared on Fool.com and is written by AnnaLisa Kraft.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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