Rare Book Monthly

Articles - September - 2011 Issue

It's Been a Tough Month for Large Book Retailers

Bordersbye

Borders bids its final farewell.

This has not been a good month for large, chain bookstores, especially so for their investors. Physical retailing has been battling online selling for a decade, and physical books have been battling electronic ones for the past two years. Neither has fared well. Both will survive for many years to come, but will continue to lose market share to their electronic counterparts. It makes for a difficult business, and tough investment.

 

A little over a month ago, the number one bricks and mortar book retailer, Barnes and Noble, its stock long in the doldrums, received some good news. Liberty Media, noted for buying up troubled companies, made an offer of $17 per share. Now this may not seem exciting for a company whose share price reached $45 five years ago, but it had spent most of the year under $15, and briefly hit an all-time low under $10. However, Liberty was less interested in its stores than its Nook electronic reader, a surprising success after belatedly entering the market way after Amazon's Kindle. Kindle remains by far the leader, but the Nook has become a solid number two, garnering around a quarter of the market and growing.

 

However, it appears that Liberty and Barnes and Noble could not agree on the value of the Nook, so Liberty withdrew its takeover bid and instead purchased $204 million worth of B&N preferred stock. It pays a hefty 7.75% dividend and can be converted into a 16.6% share of the company. This provides the company with welcome cash, but the dividend rate it must pay is high, and a conversion of the preferred stock to common will result in shareholder dilution. The investment may be good for the company, but not so good for shareholders. The stock price quickly dropped to $10, and recently was trading for $11. That $17 offer doesn't look so bad now.

 

For the number two physical retailer of books, there is really no more to say. In February, Borders filed for bankruptcy protection, and in July announced that no buyer for the chain could be found. Instead, it would close all of its stores and liquidate its assets. That liquidation should be completed by the end of this month, bringing a final end to Borders' 40-year career. You may find some bargains in the next few days at your local Borders store as discounts are large, but what is likely to be left now are the dregs. You can also find Borders stock at a cheap price. It has ranged between 2 and 4 cents a share the past few weeks. At its peak it cost $37. Don't waste your money. It isn't worth 2 cents. Eventually, it will settle at zero.

 

The third largest bricks and mortar book retailer in America, soon to be number two, is attempting to pick up some sales from the Borders bankruptcy. Books-A-Million, the southern-based bookstore chain, attempted to purchase the leases, fixtures, and inventory of 30 defunct Borders locations. The two could not reach a deal, but Books-A-Million will be taking over the leases of 14 closing Borders locations. BAM (as Books-A-Million is also known) is looking to expand its footprint north. Stores in Maine, New Hampshire, Connecticut, Maryland, New Jersey, Illinois, Wisconsin, Michigan, Pennsylvania and Ohio are reportedly among those sought to be taken over.

 

While Books-A-Million has been swimming against the tide by actually expanding its physical presence, it still has not been an easy time for the growing chain. The firm recently reported a $2.9 million loss for the second quarter, compared to a $1.9 million gain for the same quarter in the previous year. Its recent stock price, below $2.50, is approaching historic lows. That's about one-quarter of its price of 20 years ago, not a great long-term investment. The troubling results showed an 11.4% decline in overall revenue and a 12.9% decline in sales at same stores year over year. CEO Clyde Anderson stated, "A soft publishing lineup, the effect of e-book migration and the impact of Border's liquidation all contributed to the decline in comparable-store sales."

 

However, there remains one positive book investment story - Amazon.com. The largest online bookseller, and leader in the electronic book field, continues to trade around the $200 per share level, near its record high price reached earlier this year. Indeed, if you bought Borders stock for $37 in 1998, you could have purchased Amazon for half that price. Now Amazon stock is worth $200 and Borders 2 cents. The challenge for investors today is to figure out which companies are the next Amazon, and which are the next… Borders.

Rare Book Monthly

  • <b>Bonhams, Jun 13 results:</b> Darwin, Charles. <i>On the Origin of Species.</i> Presentation Copy. Sold for $500,075.
    <b>Bonhams, Jun 13 results:</b> Darwin, Charles. Autograph Letter Signed, 3 pp, negotiating the 2nd American edition with Appleton. Sold for $21,325.
    <b>Bonhams, Jun 13 results:</b> Hemingway, Ernest. Autograph Letter Signed, 8 pp, Paris, 1924, to his father discussing Bullfighting, Stories, and his new baby. Sold for $25,075.
    <b>Bonhams, Jun 13 results:</b> Shakespeare, William. <i>Corialanus.</i> London, 1623. 1st printing [Extracted from the First Folio]. Sold for $50,075.
    <b>Bonhams, Jun 13 results:</b> Swift, Jonathan. <i>Gulliver's Travels.</i> London, 1726. 1st edition, Teerink's A edition, fine, large copy. Sold for $21,325.
    <b>Bonhams, Jun 13 results:</b> Fitzroy, Robert. Autograph Letter Signed to agent Thomas Stilwell, informing him of the progress of H.M.S. Beagle. Sold for $17,575.
    <center><b>Bonhams<br> Property from the Collection of Nicole and William R. Keck II</b>
    <b>Bonhams, Jun 13 results:</b> Shakespeare, William. <i>Sonnets.</i> 1901. 2 volumes. Printed on vellum and illuminated by Ross Turner, bound by Trautz-Bauzonnet. Sold for $13,825.
    <b>Bonhams, Jun 13 results:</b> Beardsley, Aubrey. <i>The Birth, Life, and Acts of King Arthur.</i> 1893-94. 2 volumes. Contemporary painted vellum gilt by Chivers. Sold for $5,325.
    <b>Bonhams, Jun 13 results:</b> Assisi, St. Francis. <i>The Canticle of Brother Sun.</i> Illuminated on vellum, for the Grolier Society. Sold for $7,575.
    <b>Bonhams, Jun 13 results:</b> Rackham, Arthur. <i>Peter Pan in Kensington Gardens.</i> 1/500 copies signed by Rackham. Sold for $4,825.
    <b>Bonhams, Jun 13 results:</b> Proust, Marcel. <i>Du coté de chez Swann.</i> 1st edition, 1st issue. Inscribed by Proust. Sold for $8,825.
  • <b>Swann Auction Galleries Aug 7:</b> Sergio Trujillo Magnenat, <i>Bogotá 1938 / IV Centenario / Juegos Deportivos Bolivarianos,</i> 1938. $2,000 to $3,000.
    <b>Swann Auction Galleries Aug 7:</b> <i>McQueen Drives Porsche,</i> designer unknown, 1970. $800 to $1,200.
    <b>Swann Auction Galleries Aug 7:</b><br>Joe Bridge, <i>Bignan / A Des Ailes,</i> 1921. $5,000 to $7,500.
    <b>Swann Auction Galleries Aug 7:</b> Graham Simmons, <i>The Army Isn’t All Work,</i> 1919. $1,000 to $1,500.
    <b>Swann Auction Galleries Aug 7:</b> Leonetto Cappiello, <i>Je ne fume que le nil,</i> 1912. $800 to $1,200.
    <b>Swann Auction Galleries Aug 7:</b> <i>Attack of the 50 ft. Woman,</i> designer unknown, 1958. $3,000 to $4,000.
    <b>Swann Auction Galleries Aug 7:</b> Raymond Tooby, <i>Festival Guiness / Have You Tried One Yet?,</i> 1952. $600 to $900.
    <b>Swann Auction Galleries Aug 7:</b> Francisco Tamagno, <i>Terrot & Co. / Dijon / Cycles Motorettes,</i> 1909. $2,000 to $3,000.
    <b>Swann Auction Galleries Aug 7:</b><br>A. Hori, Oakland / General Motors, circa 1925. $3,000 to $4,000.
    <b>Swann Auction Galleries Aug 7:</b> James Montgomery Flagg, <i>Travel? Adventure? Answer – Join the Marines!,</i> circa 1918. $4,000 to $6,000.
  • <b>Lark Mason Associates, Aug 8-27:</b> Roberts, David. Twenty Lithographs of the Holy Land, 19th Century. $2,000 to $4,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Declaration by the Reps. of the United Colonies of N.A. 1775. $8,000 to $12,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Composer Jerome Kern personal Letters, Albums and Other. $15,000 to $25,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Paine, Thomas. <i>Common Sense,</i> London 1776. $8,000 to $12,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Stowe, Harriet Beecher. <i>Uncle Tom’s Cabin,</i> Cleveland 1852. $4,000 to $6,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Hobbes, Thomas. <i>Leviathan,</i> 3rd edition, London 1651. $2,000 to $3,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Anno Regni Georgii III. Intolerable Acts and other Bills, 1774. $15,000 to $20,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Wilberforce, William. An Abstract of the Evidence, 5 Letters, and two books. $6,000 to $9,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Nightingale, Florence. Notes on Nursing and Signed Letters, ca. 1860 $4,000 to $6,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Tolstov, Leo. <i>War and Peace,</i> 5 volumes, 1886. $3,000 to $5,000.
    <b>Lark Mason Associates, Aug 8-27:</b> Dickinson, John. Letters from a Farmer in Pennsylvania, 1768. $1,500 to $2,500.
    <b>Lark Mason Associates, Aug 8-27:</b> Twain, Mark. <i>Tom Sawyer,</i> 1877 [and] <i>Huckleberry Finn,</i> 1885. $4,000 to $6,000.

Article Search

Archived Articles

Ask Questions