This follows a report from the retailer in January that its Nook unit revenue fell 12.6 percent to $311 million during the critical holiday period. Overall sales during the holiday period fell 10.9 percent at bookstores and online compared with a year ago. Barnes & Noble is scheduled to report third-quarter results Thursday.
Barnes & Noble bookstores, though, have been profitable even though they're facing falling sales. The company has broadened its offerings in stores and sells more high-margin games, educational toys and other non-book items to improve results.
In its fiscal second recent quarter ended Oct. 27, earnings before interest, taxes, depreciation and amortization in the retail segment — which includes the stores and the Web site that Riggio wants to buy — doubled to $28 million, helped by selling higher margin products. Revenue from that segment fell 3 percent to $996 million. Overall, the company's net income totaled $2.2 million, up from a prior-year loss of $6.6 million. Revenue was nearly flat at $1.88 billion.
Monday's filing with the U.S. Securities and Exchange Commission said that Riggio, who is Barnes & Noble's largest shareholder with nearly 30 percent of the company's shares, will seek to negotiate a price with the company's board and pay for the deal with cash and debt. Riggio is making the offer in order to facilitate the company's review of its strategic options for separating its Nook business, according to the filing.
Barnes & Noble said the offer will be considered by a committee of three independent directors. But there is no set timetable for the process.
Morningstar's Wahlstrom said the deal makes sense considering the retail side of the business has been overshadowed by investments needed for the Nook business. He added that the move by Riggio was not unexpected: His large stake in the company — and history with it — would likely make finding extra financing the company needs easier.
"Riggio feels like he can run it better than just about anyone else, and with four decades of operating history there's not much reason to believe that he can't," he said.
On the news, Barnes & Noble shares rose $1.55, or about 11.5 percent, to close at $15.06. Its shares have traded in a 52-week range of $10.45 in mid-April to $26 later that same month.