April 18, 2014
Len Riggio sells 3.7 million Barnes & Noble shares
by Alex Shephard
There’s something of a fire sale going on at Barnes & Noble right now—and no, they’re not cutting Nook prices again. Two weeks after Liberty Media dumped a large portion of its 17% share, Len Riggio has announced that he is selling 3.7 million shares of B&N stock. While he will remain the company’s largest shareholder, his stake is now just 20%. Riggio also sold 2 million shares back in December, lessening his stake in the company from 30% to 26%.
According to Publishers Weekly:
B&N said the sale of shares is part of Riggio’s long-term financial and estate planning and that he has no plans to sell more shares in the calendar year. In a statement, Riggio said, “after this sale I remain the company’s largest shareholder, a position I feel very good about. I love this company and I believe in its future as I do in all of the wonderful people who work here.”
Barnes & Noble is now an old hand at responding to bad news with a hefty portion of optimism. After Liberty Media announced it was selling most of its stake in the company, both parties agreed the move would give “the bookseller more flexibility to explore new strategic options.” Of course, one never expects the full picture from a press release—especially a press release from a Fortune 500 company—and learning how to spin anything positively seems to be the main point of getting an MBA.
When Riggio sold 2 million shares 5 months ago in December, the announcement was very similar. According to the Wall Street Journal‘s Jeffrey Trachtenberg, Riggio “said he would use the losses to offset gains from other investments for tax purposes and doesn’t have “any intentions of selling more shares.” Yesterday, Riggio reiterated the fact that he has no intention of selling more shares this year to Trachtenberg and said he plans to be “a big owner for a long time.” However, even though it seems fairly certain that Riggio won’t dump any more stock this year, he may not be done selling in the long-term. On the question of selling in 2015 and beyond, Riggio told Trachtenberg, “I can’t go beyond that. I can’t limit my options.”
Investors seem wary, however. When Liberty Media announced they were bailing, stocks dropped 13% to $19. Today, they’ve fallen another 12%, and currently stand at $16.30.
Over the years, there’s been a lot of speculation that Riggio would separate Barnes & Noble’s profitable retail business from its massively unprofitable digital business and, as Publishers Weekly, put it, “take B&N stores private.” Those rumors had decreased after Riggio sold stock back in December, but they returned after Liberty Media cashed out earlier this month. Now, it seems they can be put to rest for good. Riggio told Trachtenberg that the reason for the sale is simply that “I’m 73 years old.” Taking B&N stores private would be a monumental task for anyone, and it’s understandable that it’s not one that Riggio wants to take on as he gets older. When I’m 73 years old, I hope to be reading, seeing my grandchildren, and playing an unsettling amount of shuffleboard—not trying to steer a clunky, somewhat outdated ship through rocky, uncharted waters.
But it is still disappointing. I like to have fun at Barnes & Noble’s expense—I’ve called them, among other things an “embattled public restroom”—but I’ve come to respect Riggio as someone who cares about books and bookselling, despite my concern for his company’s future. Back in September, after the CEO of Liberty Media admitted “Look, no one’s happy about the Nook,” I wrote this:
Riggio clearly believes very strongly in the business of bookselling—I don’t doubt for a second that it is, as he says, “personal” and “not all about money.” Barnes & Noble was the Amazon of the 90s, so Riggio was, to indie bookstore-lovers and many others, the big bad wolf of that decade (though he was great in that Meg Ryan movie). But, over the past decade a fuller—and, one suspects, more complete—picture of the man has emerged. He’s clearly rooting for the stores to succeed and not just to save the company—I don’t expect Barnes & Noble’s investors to make the best decision for the company as a bookseller, but I do expect Riggio to. (That said, I suppose it’s easy to love the house cat that pisses everywhere once the tiger shows up.)
But running a business isn’t something you can do forever and it’s disappointing, if not unexpected, to see Riggio starting to give up more and more control as he gets older—especially because, to reiterate the point I made last summer, he clearly cares about the book business, not just business.
John Tinker, an analyst at the Maxim Group, told Trachtenberg that Riggio’s decreased stake in the company puts “more pressure on the company to get something done” and “brings a greater sense of urgency.” Tinker’s right: the clock is clearly ticking for Barnes & Noble—but it’s been ticking for a while. Barnes & Noble’s future remains uncertain—and it’s hard to feel too upbeat with Riggio clearly eyeing retirement and the company till wedded to the Nook and (seemingly, at least) out of new ideas.
Alex Shephard is the director of digital media for Melville House, and a former bookseller.