When Barnes & Noble announced on Jan. 5 that it may spin off its Nook e-book unit into a separate business, investors didn’t take the news well: Shares of the largest U.S. bookstore chain tumbled 17 percent, erasing $139 million in market value. The prospect of the company spinning off its fastest-growing business—which has grown to $1.5 billion in annual revenue since its November 2009 launch—made shareholders downbeat about the future of Barnes & Noble’s 700 brick-and-mortar bookstores. William Lynch, the company’s upbeat chief executive officer, says investors who panicked got it all wrong.
Whatever happens with the digital unit, he says, its future will still be intertwined with the stores because that’s where a majority of Nook devices and accessories are sold. “They’ve been nothing short of vital,” he says. A possible separation of the digital business “doesn’t mean that Nook and Barnes & Noble sever the relationship. In fact, it’s just the opposite. We have plans to expand the footprint of Nook in our stores. We are doubling down.”