Stocks That Won’t Exist in a Decade: Barnes & Noble (BKS)
The Way Out: Bankruptcy
It’s not as if Barnes & Noble, Inc. (NYSE:BKS) hasn’t tried. The company had some fleeting success with its NOOK e-reader … but that unit now is expected to lose $20 million on an EBITDA basis in fiscal 2017 (ending April). Barnes & Noble offers Starbucks Corporation (NASDAQ:SBUX) coffee in its cafes, but traffic continues to decline.
With Amazon now opening its first store in New York City, Barnes & Noble faces new bookstore competition — something it hasn’t had in some time. And with comparable-store sales expected to decline 7% in FY17, it’s not as if business is all that strong to begin with.
BKS still is profitable, still generates cash and still pays out a handsome 6.5% dividend yield. But the tipping point for Barnes & Noble is coming in the next few years: As sales decline, the company will turn unprofitable. And at some point — likely within the next few years — Barnes & Noble will be just another one of Amazon’s many brick-and-mortar victims.