Who Wants to Buy Barnes & Noble?

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From The New Republic:

Can things get worse for Barnes & Noble? In 2018, it comes across as a silly question. Decades removed from its heyday as the brutalizer of small bookshops—the inspiration for Tom Hanks’s soul-destroying monolith in You’ve Got Mail—the store is running on fumes. Its stock price sits at five dollars. Its high-profile attempts to compete with Amazon in e-commerce and e-books have been expensive failures. It has had four CEOs in the past five years, a period in which it has closed stores and laid off staff, including 1,800 in February.

But on Tuesday, Barnes & Noble hit a new low when its last CEO, Demos Parneros, sued the company for defamation and breach of contract. Parneros alleges that he was pushed out after a deal to sell the company to an unnamed buyer fell through, and that Barnes & Noble covered it up by bringing bogus charges of sexual harassment and bullying against him. Barnes & Noble fired back that Parneros had been “terminated for sexual harassment, bullying behavior, and other violations of company policies.” (It had previously declined to specify the former CEO’s alleged misdeeds in a statement announcing his departure on July 3.)

Parneros’s filing is apparently designed to generate a settlement and should be taken with a grain of salt. Still, its contents are damning. It portrays a company in dire straits being presided over by a longtime chairman, the 76-year-old Len Riggio, who spends his time berating subordinates. While Riggio has presented himself as the heart and soul of the company, the lawsuit depicts him as an albatross. It shows that the company is struggling in every conceivable aspect of its business, which means that finding a new CEO—let alone a buyer capable of turning the company around—will be exceedingly difficult.

. . . .

An art collector and philanthropist with a ruthless streak, Riggio spent two decades steamrolling independent booksellers and bending publishers to his will. But when Amazon emerged, Riggio was caught on his back foot. He lacked Amazon’s technical expertise and its even deeper pockets. Barnes & Noble’s attempts to compete with Amazon—a clunky website, then a clunky e-reader—were disasters that cost the company hundreds of millions of dollars.

Between Amazon’s disruption, the 2008 financial crisis, and the ongoing retail apocalypse, Barnes & Noble has struggled to stay afloat. It has lost money in eight of the last ten quarters and six of the last eight years. Riggio has at times seemed ready to exit the company: He announced his retirement in 2016, but never stepped down as chairman.

. . . .

There has been growing frustration with Riggio in the publishing industry, as Barnes & Noble has failed to settle on a strategy after it all but abandoned its e-book business. Since Borders went out of business in 2011, publishers have become enormously dependent on Barnes & Noble, which for many is their second-largest account after Amazon.

According to the suit, Riggio’s solution may be to just sell the company.

. . . .

Who could this retailer be? It’s unlikely to be Amazon, which is forging its own path and has thus far seemed only marginally interested in physical book retail. It’s not clear that Books-a-Million and Half-Price Books, the second- and third-largest general trade book retailers, have the resources, let alone the ambition. One possible candidate, according to multiple sources in book publishing and retail, is the Canadian book seller Indigo, which has defied the bleak trends in publishing in recent years, posting profits and selling literary fiction by the crateload. (People in book publishing talk about Indigo the way liberal voters talk about moving to Canada—as an almost mythical promiseland.)

Link to the rest at The New Republic

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17 thoughts on “Who Wants to Buy Barnes & Noble?”

  1. I can’t think of anyone who would buy B&N. Maybe Amazon or Indigo or Kobo?

    What would you be really buying? B&N’s e-business? No. Their vaunted expertise in bookselling? No. An innovative and nimble management team? Uh, no. Their stock? I would think most of that would be returnable. (Boy, wouldn’t a B&N collapse be a shock to NY publishers? All that returned inventory.)

    Near as I can tell, all a B&N buyer really gets is a bunch of real-estate. Can anyone think of an angle I’m missing.

    I think B&N is most likely to be cut up and sold off for parts, rather than to be absorbed as a going concern.

    S.

    • (Boy, wouldn’t a B&N collapse be a shock to NY publishers? All that returned inventory.)

      There’s a better chance they’d simply ‘lose’ that inventory – only to see it pop up on Amazon at prices that undercut their own stock. (So they’d lose coming and going! 😉 )

    • A B&N buyer would get their warehouses and logistics backbone. It is both substantial and valuable. Probably worth more than the company as a whole. Lots of outfits would love to buy that if it were unfettered from the rest of the company.

      Back in the 90’s B&N tried to buy Ingram and were blocked on antitrust grounds because they already were a big distributor in their own right and would control the pricing of too many of their competitors.

      So if the backbone were unbundled all sorts of dry goods retailers could use it. Or, if allowed to ditched the storefront contracts without penalty, a foreign bookseller would have a turnkey entry to the US market, needing only rational sized storefronts.

      Names that come to mind are Indigo (of course), Waterstones, FNAC, Bertlesmann, somebody out of China, Japan, Spain or Mexico.

      Plenty of possibilities exist so long as they don’t have to take on the storefronts or any of the managers. Especially after this year’s layoffs.

      The bankruptcy sale will have plenty of bidders…

      …for the pieces.

        • …or anybody he influenced.
          Can’t have any remnant of his attitudes or management style. The well is so poisoned it has to be totally drained if the brand is to regain any of its faded luster.

          Again: he’s leaving it as he found it.

    • They only go after something they can drain and then walk away from, B&N is already too far gone for a corporate raider to milk ant drier …

  3. I love the complaint that B & N couldn’t compete with the “deep pockets” of Amazon.

    True statement, now, and for a few years. But when Amazon was “emerging,” Bezos would have been hard to find in the lint at the bottom of Riggio’s pockets.

    B & N failed to see the market trends. When they finally, sleepily, opened their eyes, they failed to exploit the market trends. The only thing that they have not failed at is in finding excuses and scapegoats for their own mistakes.

        • You’re welcome.

          To add to the fun, consider that even by 1997 knowledge the article was laughably wrong. Just the idea that a deal with the NYT website was comparable to a deal with 1997 Yahoo was hysterical.

          Bezos’s quote was so spot on he obviously had already visited the B&N website. 🙂

      • “September 29, 1997”

        Dang, it’s old enough to drink in the US! 😉

        “Jeff Bezos, Amazon’s endearingly candid founder, agrees that Barnesandnoble.com can duplicate what Amazon has done. The question, he says, is, “Can Amazon.com establish a world-class brand name before Barnesandnoble.com buys, builds, acquires, or learns the competencies they need to be excellent online retailers?””

        Seems the answer to that was ‘yes’ …

  4. Well, Parneros may not get vindication but it sure looks like he might get vengeance. That is not a flattering profile of Riggio in there.

  5. I really think Riggio just doesn’t understand quite what has happened to B&N. He’s lost a whole lot of customers and he just doesn’t get how, or why, and he thinks that if he does some unspecified good things then they will all appear again, somehow, from wherever they are hiding. Sales go down every year, and in his world that’s the fault of somebody who works for him. A thankless job, B&N CEO is.

    I’m not surprised B&N can’t be sold. Most small bookstores shut down with at least one potential buyer failing to pull the trigger, if that. Why buy B&N at all? To get those valuable big-store leases locked in? To get the inventory? To get the exceptional irreplaceable talent?

    In the words of our CIC. Sad.

    • Yes, it sounds like he doesn’t get that he hasn’t just lost sales (that might return with the improved economy) but rather he has lost customers. For good. For ever and ever.

      As the even older song said:

      https://www.youtube.com/watch?v=vTfNHSbs3pQ

      How you gonna keep them in the store after they’ve seen the ‘Zon? 😉

  6. Dang, the old songs just keep on coming to mind with each new headline …

    ‘B&N – What is it good for?’
    (Nothing!)

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