October 4, 2018
Len Riggio, who has fired four CEOs in five years, denies that instability in corporate leadership has hurt Barnes and Noble
by Simon Reichley
It’s been almost two months since Barnes and Noble fired CEO Demos Parneros. At the time, details on the ouster were scarce, but in late-August, Parneros filed a lawsuit against his erstwhile employer, claiming defamation and breach of contract. In the suit, Parneros said that B&N was “financially troubled,” that founder Len Riggio was “erratic and unprofessional,” and that the company had encouraged rumors of sexual misconduct on his part; in a statement responding to the allegations, the board of directors at B&N said that Parneros had, in fact, been a bully and a sex pest, and was let go for that reason. Bad looks, all over.
But the most explosive news to come out of the Parneros lawsuit, was the revelation that an unnamed “book retailer” had submitted an offer to buy Barnes and Noble, only to retract that offer after inspecting the company’s financial health. Parneros claims that this imploded deal was what ultimately set him on a collision course with Riggio.
While more information may come out of the Parneros suit, many industry experts have seen enough. At this point, even the most optimistic prediction for the future of Barnes and Noble is one of graceful diminution. Mike Shatzkin of the Idea Logical Company told Corinne Ruff at RetailDive:
“Len Riggio, I don’t believe ever has accepted the notion that I started with, which is that you can’t grow, that the basic business model of being a book retailer has been seriously undermined…I’m sure it’s frustrating for the CEO and I’m sure it’s frustrating for Len Riggio, who I’m sure would like to retire or sell the stock or whatever, but he doesn’t want to leave a failure, he wants to leave a success…[but] the die is cast. They won’t make it bigger.”
Other commentators, such as this anonymous (and savage) “industry veteran” were not so generous in their outlook:
“The thing to do is to put Barnes & Noble in hospice. And obviously you want to keep it alive as long as you can, you want it to be comfortable, you want them to feel as little pain as possible, but the fact is it’s going to die.”
To which one can only say, “Damn.”
It’s becoming a tired refrain, but Barnes and Noble is in a tight spot. But you wouldn’t expect Riggio to admit it. And indeed, in a recent interview given to Jim Milliot at Publisher’s Weekly the founder and acting CEO attempted calm nerves and settle stomachs. While he admitted that the events of the last year–including disappointing sales numbers, an ugly operating loss, and the aforementioned lawsuit–were “unnerving,” he insisted that instability in leadership hadn’t hurt the company, that he was “happy to be here” after replacing Parneros, and that the management team at B&N expects an improvement in comparable store performance this holiday quarter.
It seems at this point that Riggio will need something of a miraculous season–a Christmas miracle, if you will–to turn things around. Which isn’t to say that Barnes and Noble doesn’t have a strategy. As was announced at the time of Parneros’s departure, the company will continue it’s plan to deploy several new outlets around the country, where they’ll test new floor-plans, merchandising, and staffing strategies. After learning what they can from these test cases, Riggio hopes to settle on a new “prototype” store, and begin rolling them out across the country, sometime in the next twelve to eighteen months. It is this task, deciding where and how to open new stores, that will fall to the new CEO, who Riggio anticipates will be installed sometime after the holidays.
As mentioned before, the industry could have a lot riding on the next 18 months at Barnes and Noble. After years of upheaval and disappointing sales, it’s not clear whether Barnes and Noble can continue as a viable, if diminished, retail alternative to Amazon, or if, as our anonymous curmudgeon suggests, its time to start planning a funeral.
Simon Reichley is the Director of Operations and Rights Manager at Melville House.