Following a less than stellar fiscal year 2016 fourth quarter earrings picture, Barnes and Noble’s (B&N) board of directors fired CEO Ronald D. Boire after less than a year at the helm. The board cited he “was not a good fit for the organization.” Boire had previously been CEO of Sears Canada and had senior roles at Best Buy and Sony Electronics. Boire was brought on board to expand B&N’s electronic products.
Boire’s firing was precipitated by the loss of $30.6 million in FY2016 fourth quarter compared to the $19.4 million loss at the same time last year. Sales were down from last year’s total of $910 million to $876.6 million this year. Upon hearing the news, one publisher expressed unhappiness with this internal shakeup at the nation’s largest retail bookseller as they “’need them to execute on the ground’ during the holidays.” Following news of the firing, Len Reggio, founder and executive chairman of B&N, announced that he will postpone his previously planned September retirement and will stay on at B&N until a new CEO has been hired.
A number of factors have influenced B&N’s recent decline such as the overall decrease in “brick-and-mortar” bookstores due to the general move from print books to digital. Additionally, B&N has not been able to increase the sales of its e-reader, the NOOK, while competitor’s tablet sales continue to rise. A third factor is that B&N has not been able to succeed at an international corporate expansion, unlike Amazon and Apple.
B&N’s outlook for the future includes “executing a number of initiatives to grow bookstore and online sales, reduce Retail and NOOK expenses and grow our Membership base.” B&N currently has 640 stores across the country as well as an online storefront. They are focused on improving their physical storefronts following the decision to downsize the NOOK division as well as separate their college bookstore business, Barnes & Noble Education, into a separate company.
B&N will not desert their NOOK operation as they have 2 million active customers, but they have announced that they have no plans to grow the business.
In order to increase store traffic, B&N will invest in “concept stores” that will be a “destination” and type of community meeting place and will feature restaurants utilizing waiter service, and a breakfast, lunch, and dinner menu that will include beer and wine and Starbucks coffee. Books will be the major feature and stores will also encourage customers to purchase books online. The first concept store is set for Westchester County, NY in a former Borders location (hope that’s not bad mojo) and other locations are planned for Edina, MN, Folsom, CA, and Loudoun County, VA. If the concept stores are a success, B&N plans to alter existing stores to fit the new model. B&N is also focused on cataloging books in “new ways that will make titles easier to find,” according to B&N’s Chief Merchandising Officer, Mary Amicucci. She also insists that their 28,000 booksellers is their key to book search and “cannot be replicated by any algorithm.”
B&N’s 6-million loyalty member base is another key to their success as members spend more than twice as much as the average B&N customer. To grow their membership base, B&N will start offering different membership plans to increase membership rates and individual spending.
Despite their plans, questions still remain on how B&N will grow its e-book business and compete with Apple and Amazon. Interested in B&N’s progress? B&N financial press releases are listed on http://www.barnesandnobleinc.com under newsroom.
By Jennifer Cassou