Barnes & Noble Still Doomed Despite Rising Profits

Moneybox
A blog about business and economics.
Nov. 26 2013 3:36 PM

Barnes & Noble Still Doomed Despite Rising Profits

Here's some good news for Barnes & Noble—profits are up this quarter. Up quite a bit in fact, 13.7 percent compared to the same quarter a year ago.

So has the company miraculously found some way to save itself? Nope. Revenues are down 8 percent. The profit growth reflects skill at cost-cutting, not any reversal of the underlying doom of the enterprise. They fought the good fight with the Nook, but ultimately they couldn't beat the Kindle. And large impersonal book stores just aren't a kind of business that has a bright future.

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This, incidentally, is what leveraged buyout shops and financial engineering should be good for in the business world. There's no point in managing Barnes & Noble for long-term growth at this point. But it's not as if nobody is going to ship at a brick and mortar book store next quarter. It's just that there's no future here. The company needs to got to the corporate equivalent of a hospice and be owned and managed by people who'll maximize the value of the existing assets rather than struggling too hard against the inevitable. Ideas that are lame and awful in the context of a company like Apple, make perfect sense in the context of a company where innovation and growth are clearly impossible.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.