Barnes & Noble (NYSE:BKS) is on the ropes. They have stopped giving guidance because the numbers are too damn embarrassing. They are closing stores and fending off activist investors who think they can run a bricks and mortar business in a digital world. So out of the blue they announce this expansion thing in the UK. Long criticized for a poor presence over seas they decide ti interrupt their life boat drills and open up a shiny new store.
Several possible explanations.
- The board and senior executives are delusional and believe an invasion of Europe will help solve their problems. Maybe?
- Activist investors are pushing on this point so hard management needs to do something to shut them up. Possibly?
- They are looking to distort market operations with large book orders and position themselves in a post bankruptcy world. I like this one.
If you believe life is a chess game they have just moved a knight in a strange way and are seeking a gambit. They cannot hope to influence markets in the US. But if they go to Europe they can become disruptive enfant terrible who must be bought out or off. At first you are ignored, then you become a pest. Eventually you upgrade yourself from damn annoying to insufferable. Marketing directors fall on their sword and CFO’s reach for their cheque books.
Far fetched. Don’t kid yourself. The crazy player theory has worked before. Question is does Barnes and Noble have enough time to make it work.
George Gutowski writes from a caveat emptor perspective.