New York-based Barnes & Noble said that its board has authorized management to split off Nook Media, which includes its devices, digital content and college bookstore businesses, as a separate public company. The separation is expected to be completed by the end of the first quarter of 2015.
Barnes & Noble operates 651 retail locations in 50 states as well as an e-commerce site, while the Nook business includes a digital reader, retailer and about 700 bookstores serving than five million university students. The company has been attempting to reinvent itself in reaction to a competitive onslaught by Amazon.com (AMZN) and other digital sellers.
The company also on Wednesday reported Ebitda of $11.2 million for the quarter ending May 3, significantly higher than the Ebitda loss of $124.6 million recorded during the same three months a year prior. Sales grew 3% year-over-year to $1.32 billion.Barnes & Noble said its retail segment, which includes the bookstores and its bn.com business, generated Ebitda of $354 million on sales of $4.3 billion in the last 12 months. The college segment reported Ebitda of $115 million on $1.7 billion in sales, and Nook had an Ebitda loss of $218 million on revenue of $506 million. Barnes & Noble CEO Michael P. Huseby in a statement said that the company's work in recent years streamlining its operations has prepared it for a split. "We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately," Huseby said. "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." The company is working with Guggenheim Securities and Cravath, Swaine & Moore on the split. The split comes less than a year after company founder and lead shareholder Leonard Riggio abandoned efforts to force a breakup, dropping a bid to acquire the company's retail operations. Later in the year CEO William Lynch, a strong advocate of the Nook operation, resigned, replaced by CFO Huseby as CEO in January.
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