Tattered Cover, the legendary Denver group of independent bookstores will be rescued from bankruptcy by Barnes & Noble.
B&N, headed by James Daunt, confirmed reports that the giant book retailer will buy the Colorado based firm for $1.83 million. The transaction must still be reviewed by the federal bankruptcy court. It is expected to become final by the end of July. The purchase includes all of Tattered Cover present stores and has provisions for extending the leases in several of its locations.
As recently as mid-June Tattered Cover was deeply in the red and headed for the auction block with multiple serious bidders standing in line. The auction was abruptly canceled when talks with B&N proved fruitful. What seems like the secret sauce in this unexpected turn of events is that Daunt, in addition to heading B&N, is himself an independent bookstore owner in London, with a record of reviving failing independents.
According to the B&N website, “James Daunt is Chief Executive Officer of Barnes & Noble, the world’s largest retail bookseller, of stationery and gift retailer Paper Source and of Waterstones, the largest retail bookseller in the United Kingdom. Mr. Daunt currently oversees more than 600 Barnes & Noble bookstores and 125 Paper Source in the United States and over 300 bookshops across the United Kingdom, Ireland, The Netherlands and Belgium, which include Waterstones, Blackwell’s, Foyles and Hatchards.
“Mr. Daunt has over 30 years of experience in bookselling. After eschewing an early career as an investment banker, Mr. Daunt opened his own bookstore in London in 1990, called (unimaginatively) Daunt Books. Daunt Books now has nine locations, mainly in London, and remains independently owned by Mr. Daunt.
“In 2011, Mr. Daunt was appointed Managing Director of Waterstones when businessman Alexander Mamut bought the struggling bookseller. Waterstones was subsequently restored to profitability, a success that led to the acquisition of a majority stake in the business by Elliott Advisors in July 2018. Elliott acquired Barnes & Noble in August 2019 and Barnes & Noble purchased Paper Source in May 2021.”
(NB Elliott Investment Management, the New York hedge fund that owns Waterstones, acquired Barnes & Noble in 2019 for $683m, along with the debt the company had accumulated over the years.)
In a June 20th interview with the Denver Gazette, “Daunt emphasized that under his leadership, Barnes & Noble isn't a corporate behemoth looking to consolidate independent bookstores, but rather aiming to ‘rescue’ them.”
Barnes & Noble first took notice of Tattered Cover because it filed for bankruptcy, Daunt said, and he himself took a personal interest because of his experience as an indie bookstore owner.
“We wanted to be sure that Tattered Cover continued. There's nothing, frankly, worse than bookstores closing,” Daunt said. “But particularly an extremely storied and famous and revered bookstore like Tattered Cover.”
…“While it (B&N) may be the biggest bookselling chain in the U.S., Daunt said the old chain model hasn’t worked well in most countries and it hasn’t worked for Barnes & Noble, either.
“It's all about bringing the ethos and philosophy of independent bookselling into the chain. And until you do that, the chain doesn't work,” Daunt said. “But once you do it, it works very well.”
Daunt’s new strategy has been imitating independent booksellers and giving store teams more power in ordering books and laying out displays to cater to local tastes.
With Tattered Cover, Daunt said he aims to keep its teams in place to make decisions on how to run its stores. The difference now is they have more money backing them.
“They will be running Tattered Cover,” Daunt said, “They're not running some sort of B&N version of Tattered Cover.” …“Tattered Cover is its people and its people working in physical locations. That is what physical bookstores are,” Daunt said. “That is what I firmly believe in. And that's what I want to preserve.”
In a June 18th article Publishers Weekly recapped the history and circumstances that led to bankruptcy and the surprise new ownership:
“Tattered Cover is among the country’s most storied independent bookstores, and came to national prominence under the leadership of the late First Amendment rights advocate Joyce Meskis, who bought the store in 1974 and died in December 2022 after a long, influential career in independent bookselling.
… “In 2017, Meskis sold a controlling interest in the store to industry veteran Len Vlahos and his wife Kristen Gilligan. Bended Page, cofounded by Denver natives David Back and Kwame Spearman, bought the company in 2020. They subsequently put the store up for sale in March 2022.
“Tattered Cover's 2022 financial results show that, excluding federal Covid stimulus funds, the bookstore's net loss was $577,000, with revenues totaling $10.6 million and costs at $11.2 million. A January court filing said that the company had $3.1 million in outstanding debt to creditors in unsecured claims, according to the Denver Business Post. This included some $820,000 in secured claims owed to five lenders, including $300,000 owed to its board of directors.
“In all, a total of nine parties expressed interest in buying the company, and all signed nondisclosure agreements. Barnes & Noble’s winning offer—which was the only one that pledged to keep all four stores open—was one of three submitted by a deadline for offers, with one bid coming from Spearman and a partner and the other from a third party. A planned auction scheduled for June 11 was ultimately canceled.
The purchase will cover the $1.6 million in secured claims that Tattered Cover now says it owes, and Barnes & Noble will pay $50,000 in back rent while extending the leases on the store’s sites. The lease on the store’s main location, at East Colfax Avenue in Denver, will be extended through 2038, and the lease on the store in the Aspen Grove shopping center in Littleton would run through 2030, according to a spokesman for Bended Page.”
Related: Read RBH’s original story on the Tattered Cover bankruptcy ran is Nov. 2023.
