Make that a win-win-win-win: It is particularly beneficial for Barnes & Noble Education. Because of publisher discounts, students save 30-50%, schools receive a commission on book sales, and publishers are actually paid for their products. Why? How? Four years ago, they launched First Day Complete, a program where they partner with schools and publishers to provide all of a student's books (physical and digital) billed directly through the school. Why did we invest incremental capital into Barnes & Noble Education this past quarter? The short answer is that they are likely to be a much more durable business in two years. The combination of declining enrollments and declining rates of book purchases has decimated the company's earnings and effectively made it a nonprofit today, operating 793 physical bookstores and 606 virtual bookstores serving 6M students, generating $1.5B in revenue. College students increasingly buy their books from other sources such as Amazon, use pirated PDFs from dubious websites, or do not procure books at all for cost or logistical reasons. In the 1990s, this was a good business but today it is not. Barnes & Noble Education operates college bookstores. While there are exceptions such as Walmart, which benefits from scale and local monopolies, retailers are not particularly durable. The following segment was excerpted from this fund letter. RiverNorthPhotography/iStock Unreleased via Getty Images
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