Summer Of Spin Continues- Barnes & Noble Says “We Don’t Need No Education”

As it continues along its primrose path to irrelevancy, Barnes & Noble(BKS) will complete its long-discussed spinoff of Barnes & Noble Education this weekend.  Though the company had formerly combined its NOOK with the College business, it opted, in the end, to retain the NOOK business, and just hired Fred Argir to lead that business.  It should be noted that this is not Barnes & Noble’s first ride at the spinoff rodeo; it previously spun off Gamestop(GME) in November 2004.

Barnes & Noble shareholders as of July 27 will receive 0.632 shares of Barnes & Noble Education, which will trade under the BNED ticker, on August 2. The distribution is expected to be tax free to shareholders. In when-issued trading, Education has moved steadily downwards, from above $15 to yesterday’s close of $13.61. At the same time, the Barnes & Noble approved a policy of paying $.60 per share in dividends annually, beginning with a $.15 dividend on August 17.

Barnes & Noble operates 648 stores, compared to 724 stores for the Education business. The 648 stores mark a decline from a 2008 peak of 726 stores. Barnes & Noble had also owned hundreds of B. Dalton stores. The company has struggled with profitability. Its stores only offer the facade of a wide selection of books, as well as higher margin toys such as Rubik’s Cubes. It has stubbornly and inexplicably refused to make pricing on books competitive with online sellers, even as Amazon(AMZN) has begun rolling out same day delivery to much of the country’s population. Barnes & Noble is not and will not be a growth story- it is now in a managed decline while management extracts as much value for shareholders as possible.

Disclosure: The author owns no shares of any stock mentioned