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| Books Inc. in the Marina | |
Barnes & Noble plans to acquire Books Inc., the 174-year-old bookstore with eight stores in the Bay Area and two at San Francisco International Airport. Books Inc. filed for chapter 11 bankruptcy in January and has now filed a motion in bankruptcy court to allow the sale of its assets to BI Acquisition Co., LLC, an affiliate of B&N, for $3.25 million. The court is expected to rule on the sale this fall.
B&N said that Books Inc. will "preserve its independent identity," continuing to do business under the Books Inc. name and operating its stores. The purchase is similar to B&N's purchase last year of Tattered Cover in Denver, which also had filed for Chapter 11 bankruptcy.
Andy Perham, Books Inc. CEO since 2019 and a 15-year veteran of the company, said, "This agreement will ensure that Book Inc.'s legacy will continue for the foreseeable future. With Barnes & Noble's deep resources and world-class support, Books Inc. will be able to quickly modernize its operations so we can focus on what we do best: connecting people with books, ideas and each other."
B&N CEO James Daunt said, "Books Inc. has a storied history and wonderful bookstores, and we are very pleased to ensure their continuity. We look forward to welcoming the booksellers of Books Inc. to Barnes & Noble."
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| Books Inc. in Opera Plaza | |
In its Chapter 11 filing in January, Books Inc. said that the main cause for its problems were "dramatic changes to consumer buying patterns" during and after the pandemic. The lockdowns and then the prevalence of hybrid and remote work led to lower foot traffic and thus lower sales. At the Civic Center store in San Francisco, for example, foot traffic had declined to less than half of pre-pandemic levels. At the same time that sales declined, Books Inc. had to deal with "significant increases in operating costs, including higher payroll and rental expenses" as well as higher interest rates on its debts.
The company said it had 122 employees, "critical to its business operations," whom it planned to retain.
Sales dropped from $20.9 million in 2019 to $11.3 million in 2020, the first year of the pandemic. Sales improved in 2021, rising to $15.1 million, and to $17.7 million in 2022, then to $18.9 million in 2023. But last year, sales fell to $17.1 million--$3.75 million below 2019. Some 95% of revenue came from in-store sales. The rest of sales was evenly split between online and event programming.
In January, Books Inc. said its inventory was worth about $2.5 million. Secured debts amounted to about $1.75 million. Unsecured debts, including money owed publishers, amounted to about $3 million. Debts included unpaid California sales tax of $427,123.
Books Inc. said it had taken measures to cut costs and return to profitability, including cutting store hours and shifting staff hours to reflect the changes in foot traffic. At the height of the pandemic, it also negotiated rent forgiveness and rent reductions. It also began a customer rewards program "to promote sales growth and customer loyalty" and moved its book fair programs, children's event programs, and community outreach programs--none of which were profitable--to its nonprofit Reading Bridge entity.
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| Books Inc. Laurel Village | |
Books Inc. said additionally that it planned to work with its landlords "to adjust lease costs to align with the current levels of foot traffic and sales" in its stores. If it couldn't negotiate changes at "underperforming" stores, it planned to close them. In January, Books Inc. said it would close its Berkeley store, which it has done.
Books Inc. was founded in 1851 and boasts of being the oldest independent bookstore in the West. It's noted for having stores that are quite different from each other in look and inventory, reflecting their differing cities and neighborhoods. The company has regularly expanded and contracted during its history. Thirty years ago it filed for Chapter 11 reorganization after longtime owner Lew Lengfeld died and Borders and Barnes & Noble superstores were expanding across the country. At that point, Books Inc. closed all but two of its stores, but then rebounded under the leadership of former CEO Michael Tucker and Stephen Mayer, both of whom remained directors and equity owners.