Barnes & Noble CEO: '"Terrible Environment"

With both Barnes & Noble (BKS) and Borders (BGP) to reports this month, BKS CEO issues a warnings about his company's sales.

The WSJ Reports:

"The chairman of Barnes & Noble Inc. last week told employees via an internal memo that the nation's largest bookstore retailer is "bracing for a terrible holiday season," and that he expects "the trend to continue well into 2009, and perhaps beyond."

In his memo, Leonard Riggio, the retailer's largest shareholder, noted that comparable store sales, a key retail indicator, recently declined for the first time in the retailer's history. "Never in all of the years I've been in business have I seen a worse outlook for the economy," wrote Mr. Riggio. "And never in all my years as a bookseller have I seen a retail climate as poor as the one we are in. Nothing even close."

Barnes & Noble employs an estimated 40,000 people. Barnes & Noble shares (BKS) are currently trading at $18.55 on the New York Stock Exchange, off a fraction, but down sharply from its 52-week high of $39.52. The ongoing economic crisis will have a direct impact on the retailer's plans for new growth. Mr. Riggio wrote that the chain will "curtail greatly" the number of new store openings, and that discretionary spending will be cut sharply."

What I do find odd is his plan to "curtail" store growth. Why not just stop it and conserve cash? If the environment is clearly the "worst" it has been, then why  not be even more careful with your cash and keep it?  I understand the whole taking opportunity argument but the book biz is a stable, not growth business.  It can be very profitable when managed right and equally as unforgiven when done wrong as Borders shareholders from earlier in the decade found out.