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B&N Book Sales Up, Consolidation Helping: CEO

Friday, 6 Jan 2012 | 12:06 PM ET

Barnes & Noble lowered its year forecast and is considering its options for its Nook e-reader, but Chief Executive William Lynch insisted book sales are up and said that the company is benefiting from consolidation in the industry.

Barnes and Nobles
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Barnes and Nobles

Physical books will continue to be the largest part of the company's business, even as it continues to find ways to expand its electronic book sales, Lynch told CNBC Friday.

Thursday, the company lowered its guidance and said it is considering options for its Nook business, which while up in sales is a distant second to the Kindle e-reader sold by Amazon.com . Lynch stressed book sales are up 4 percent over the past nine weeks, overall sales are up 4.5 percent, and Ebitda is growing this year.

"We've had the benefit of a lot of consolidation," Lynch said, noting the closing of former rival Borders and cutbacks in shelf space allotted to books at such retailers as Wal-Mart Stores and Target.

Barnes and Noble CEO's Next Move
As the book seller increased its loss estimates for fiscal year due to investments in its digital business led by the Nook e-reader, Barnes & Noble is considering separating the digital business from its core. Insight with William Lynch, Barnes and Noble CEO and CNBC's David Faber.

Lynch bristled when asked about analysts' comments that are skeptical whether Barnes & Noble can survive with or without the Nook, saying, "Our Nook business grew 70 percent. I challenge anybody to find a company selling mobile devices that had that type of growth." He added the company has a $5 billion credit facility it can draw on.

Still, while sales of the Nook tablet, with 13 percent of the e-reader market, exceeded expectations, Barnes & Noble's Simple Touch reader did not.

Although it introduces more uncertainty, Lynch said that "speed isn't a factor" in announcing the discussions about possibly spinning off the Nook, adding it is more important to see if such a move would benefit the company and its shareholders. "We may do nothing," he added.

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