July 11, 2018
Barnes and Noble fires CEO Demos Parneros for violations of its company policy, withholding severance
by Simon Reichley
Only July 3rd, Barnes and Noble fired its CEO, Demos Parneros, ending the former paper clip salesman’s fourteen-month stint as top boss at the last major book retail chain in the United States. In a press release, B&N cited “violations of the Company’s policies,” but declined to provide any more specific information. They also announced that Parneros would not be receiving any severance — a surprising move, considering they paid Ron “Poor Fit” Boire $4.8 million dollars to clean out his desk in 2016.
During Parneros’s time at B&N, the company’s stock value dropped by a third and they lost $125 million dollars. Parneros did his best to spin this apparently very fucked-up situation as the first phase of a much-needed strategic overhaul, but it seems like that might not have been the most selling pitch. That said, unless Barnes and Nobel—or Parneros himself—decides to release more information on the details of these “violations,” we won’t be able to say for sure what role the company’s troubling financials played in the board’s decision to part ways with their fourth CEO in as many years.
In some ways, this feels like the new normal for B&N. They face significant competition in their market, fending off challenges from a new wave of independent bookstores as well as the depraved behemoth known as Amazon. Their retail model feels more and more anachronistic with every passing year. And they’re still desperately seeking some modicum of stability in the leadership of the company.
That’s a tough spot. But, as Mike Shatzkin at the Idea Logical Company blog points out, it doesn’t mean that B&N is on the verge of collapse. What it does mean is that things can’t continue as they are. Parneros at least recognized that, and the kinds of structural changes he initiated (smaller stores, a renovated supply chain, closer integration of the company’s online and physical operations) still seem like good ideas.
The question now is whether the leadership team that has been put in place will have the mandate—or the ability—to continue along the path that Parneros mapped out. The press release claims that “no changes in [B&N’s] goals or objectives are planned,” but, of course, plans change, and it’s hard imagine shareholders happily swallowing another multi-million dollar operating loss.
From a publisher’s perspective, much hangs in the balance. As Shatzkin points out, many publishers, particularly the Big 5, desperately need B&N for two things. First, they need a physical retail market with the kind of reach and volume that only Barnes and Noble is positioned to provide. Second, they need Barnes and Noble to be a meaningful competitor with Amazon and to push back against the tech giant’s online hegemony. Without a non-Amazon retail partner, even Penguin Random House becomes just another content provider.
Of course, nothing as large as Barnes and Noble can change so fundamentally without altering the environment it exists in. Whatever changes Barnes and Noble makes in order to stay alive (which publishers desperately need them to do) will have dramatic effects on the e-book market, backlist sales, the importance of the blockbuster best-seller, everything. Publishers can and must adapt to all of these changes, so long as they keep B&N a solvent and credible alternative to Amazon. But it won’t be easy, and chronic instability in B&N’s leadership is only going to make things more difficult.
Simon Reichley is the Director of Operations and Rights Manager at Melville House.