* Borders liquidation to help B&N sales longer-term
* B&N growth to stem primarily from e-reader sales
* Barnes & Noble shares up 3 pct in morning trade
By Phil Wahba
NEW YORK, July 19 U.S. bookstore chain Barnes &
Noble Inc (BKS.N) will eventually feel a modest boost from the
liquidation of its largest rival, Borders Group Inc, but still
faces stiff competition and an industrywide decline in book
sales, Wall Street analysts said.
Borders BGPIQ.PK said on Monday it would close out its
399 remaining stores by September after failing to find a buyer
willing to keep it in business. [ID:nN1E76H1LQ]
Barnes & Noble, which operates 717 superstores, will
struggle during its rival's going-out-of-business sales, and
then benefit as it wins former Borders shoppers, according to
But Barnes & Noble's real growth will come from its popular
Nook e-reader and increasing sales of e-books.
"Barnes & Noble is not grabbing a larger slice of a growing
pie," Morningstar analyst Pete Wahlstrom told Reuters on
Tuesday. "It would be more compelling news if the bookselling
industry had found a point of stabilization."
According to a Goldman Sachs study last year, Amazon.com's
(AMZN.O) sales of physical books last year, as opposed to
e-books, surpassed those of Barnes & Noble. Amazon is the top
seller of digital books.
Barnes & Noble shares were up 3 percent at $17.75 on
Barnes & Noble, which put itself up for sale last year, is
currently assessing a $1 billion, or $17 per share, bid by John
Malone's Liberty Media Corp. LINTA.O
Wahlstrom said the effect of Borders' bankruptcy on Barnes
& Noble's attractiveness as a buyout target was "nominal."
Same-store sales at Borders had been suffering double-digit
percentage declines for years. Overall sales fell from $3.4
billion in the year ended February 2007 to $2.3 billion last
year. Barnes & Noble has fared better, with more modest
declines in comparable sales.
Still, Barclays analyst Alan Rifkin said in a note to
clients on Tuesday that Barnes & Noble could grab between 10
and 15 percent of Borders' 2010 sales, which would lift Barnes
& Noble's revenue as much as 4.5 percent.
Yet the benefit could be short-lived, Rifkin warned, "given
the significant shift from brick & mortar to E-readers."
Last week, Janney Capital Markets analyst David Strasser
said the next round of store closings by Borders, to occur in
more desirable locations, will hurt Barnes & Noble more than
the previous Borders shutdowns, since more shoppers will be
lured away from B&N for the closing sales.
A possible benefit to Barnes & Noble could occur if it
moves into attractive locations vacated by Borders, though
Morningstar's Wahlstrom said this would happen only in a
handful of locations.
(Reporting by Phil Wahba, editing by Matthew Lewis)