July 02, 2013

B&N, Marriage, and World War Z

by Alan Beatts

Barnes & Noble's Financial Report

B&N had a very poor year based on their recent financial filings.  Their 2013 fiscal year (which ended on April 27th) showed a total loss of $154.8 million dollars, compared to last year, which showed less than half that loss ($65.6 million in 2012).  Much of that was a result of sales of their e-reader, the Nook, falling off a cliff (sales down 16.8%).  But sales at their retail stores were also poor: same-store sales (the comparison between stores that have been open for at least a year) were down 3.4%.

Most telling to me, however, are the figures for the last quarter of this year.  In the 4th quarter alone, ebook sales (both devices and ebooks) were down 34% and same-store retail sales were down 8.8%.  That looks like an accelerating slide to me.  If you dig through the accountant-speak in the report, some of the retail store sales drop was tied to poor Nook performance, but that could also be wishful thinking.  Likewise, that quarter lacked some big sellers like Fifty Shades of Gray and such but still . . . it's not looking very good.  What will tell us a great deal is what the quarterly reports for the next two look like.  If the drop continues or increases, it'll be a very bad sign for the company's future.

One thing that may change the whole equation is the possibility that B&N's founder, Len Riggio, is reportedly looking to buy the retail segment of the company and take it private (i.e. closely held, probably by his family, and not publicly traded).  Doing so would allow a much greater degree of freedom in the management since concerns like stock price would no longer stop store closures and so forth.  A few months ago I speculated that Riggio might buy one of the other two segments of the company (which are the Nook business and the college stores).  Based on comments since from Riggio and the Board of B&N it looks like I was totally wrong.

Certainly, if B&N were to close all the stores that are performing in the lower 50%, it would immediately improve the company's balance sheet.  Of course it would also deliver a huge kick in the delicate parts to the big US publishers.  Under usual bookstore terms, inventory can be returned 90 days after it was ordered for full credit.  So, the first thing that B&N would do would be to return absolutely everything they could from stores that are closing.  A huge flood of returns would hurt publishers twice.  First there would be the lost money from the books themselves because, once the books come back, there is little chance that they could be resold (except for B&N itself, there is no bookstore that could use that much inventory).  Many of the books returned would be either destroyed or sold at super low prices as remainders.  The second hit would be that B&N would have a huge credit balance with all the publishers as a result of that return.  Which means that, for some time, B&N wouldn't be sending the publishers any money.  They would be "paying" for their orders with credit.

Authors would also suffer since remainder sales and books that are destroyed are charged against their royalties.  For mid-level and even some bestselling authors that might mean a year or more without any royalty payments.  Also, if the publishers are hurting for money _and_ have lost a huge number of stores to put books into, that will mean fewer books bought by them and smaller advance payments for the books they do buy.

It's very weird for an independent bookseller to be thinking this but, for the sake of my industry as a whole, I half-hope that B&N doesn't go down.  Or at least, if it does, that it's a slow process, not a fast one.


As a rule I avoid political topics in public.  Like discussions of sex and religion, I think that it's best kept private and among friends. But, living in San Francisco over the past few days has affected me so deeply that I cannot refrain from saying something.

Wednesday night the general feeling was so happy and so exuberant that I was personally overwhelmed.  I do not think I have ever experienced such a sense of universal happiness and relief in my life.  That tone has continued since then and reached a new peak when, yesterday afternoon, marriages started being performed at City Hall (which is staying open today to continue performing marriages).  I fully expect that the Pride Parade and celebration tomorrow will be something completely unique in my 25 years of attendance.

Probably my favorite thing thus far has been this -- Yesterday afternoon, the Attorney General of California, Kamala Harris, married two of the plaintiffs in the Supreme Court case at City Hall in San Francisco.  And yesterday evening, in one of his last acts in office, the mayor of Los Angeles, Antonio Villaraigosa, married the other two plaintiffs.

As a nation we have decided that homosexuality is not a crime nor is reason for discrimination.  I'm not going to debate whether that is the right decision or not (though the answer has been clear to me for a long time).  That fact is that our body of law demonstrates that is the conclusion that our society as a whole has come to.  Having decided on that position, legalizing marriage for homosexuals is the only logical, ethical, and legal action we can take.

I wish all the married couples out there, regardless of their gender or orientation, all the joy that they could wish for and a happy, productive partnership for all the years to come.

World War Z, The Film

Max Brooks' zombie novel is quite special to us at Borderlands.  It is one of three books that, in our 15 years in business, everyone on the staff read, liked, and recommends (the other two are Little Brother by Cory Doctorow and The Gumshoe, The Witch, and The Virtual Corpse by Keith Hartman).  If you haven't read it, you really, really, should.  It transcends the sub-genre the way that The Watchman did for superheroes or Game of Thrones did for epic fantasy.

As a result I was very worried about the movie.  As soon as it was optioned to Brad Pitt I stopped having any hope that the movie would be much like the book at all.  But I was hoping the movie would be, first of all, good, and second, that it would be relatively true to the spirit and tone of the book.

I saw it Sunday night and I was very pleased.  I know that there are plenty of people who have been critical of the many, many ways that it departed from the book but I cannot imagine a way that the book could have been turned into a big-budget film without those sort of changes.  But the important parts are still there -- it's a thoughtful treatment of the topic, the big action scenes are few and far between, it almost completely lacks gratuitous explosions, and the feeling is much like the book. Including a solution to the problem implemented by North Korea that is clever, chilling, and very much in keeping with the tone of the book.  As Max Brooks himself commented, it should be judged as a movie in its own right, not as a treatment of the novel. And on that basis, I think it is very good indeed.

I did have two quibbles but, to prevent spoilers, I'm going to put them at the very end of this article.  I'm also going to frame them in a way that significantly reduces the spoiler chance.

1) Amputated limbs bleed a whole lot.  Even after they're bandaged.
2) If zombies are attracted to noise, you've got video surveillance, and there are phones scattered around, it would be very smart to herd the zombies out of your way by ringing the phones.

No comments:

Post a Comment