Barnes & Noble Swapping Space with Google in Cost-Cutting Move
June 5, 2014
Barnes & Noble Inc., the nation’s largest retail bookseller and the leading retailer of content, digital media and educational products, announced that Nook Media LLC has entered into an assignment of lease for its 208,000 square foot Palo Alto, California campus.
Google will take over occupancy of the space and in turn sublease space it leases to the two Barnes & Noble units.
NOOK Media anticipates leasing and moving into new office space in June 2014 and to terminate the sublease in mid-July 2014.
Employees will be relocated to new state-of-the art facilities totaling 88,000 square feet. Nook employees will move to a new facility in Santa Clara, California, while Barnes & Noble College’s digital education employees will relocate to a facility in Mountain View, California. The relocations are expected to occur by the end of the first quarter of fiscal 2015.
This action will result in a net reduction of annual occupancy expenses of approximately $10 million, reducing the company’s future lease commitments by $102 million.
The asset impairment charges resulting from this relocation are $30 million, which are expected to be recorded in the fourth quarter of fiscal 2014.
The company also expects to incur cash closing costs and to adjust lease accounting items in the first quarter of fiscal 2015 to reflect the impact of these relocations.
“This move is a significant step in our ongoing efforts to both rationalize and better equip the Nook business to achieve success, while positioning the digital education team and platform for future growth,” said Michael P. Huseby, CEO of Barnes & Noble, Inc. “These relocations result in work environments and related cost structure impacts that are better aligned with our business objectives and our employees’ expressed needs.”