Barnes & Noble fired CEO Demos Parneros Tuesday. The book chain cited "violations of its policies," but said that these do not involve disagreements over financial reporting, policies or practices, or any potential fraud.
Three senior executives will share Parneros's duties as B&N's search for a new CEO — its fifth within a decade — is conducted. Parneros will not receive any severance payment and is no longer a member of the board.
Leonard Riggio remains executive chairman and “will be involved” with managing the company, according to the release announcing Parneros's termination. CFO Allen Lindstrom, chief merchandising officer Tim Mantel and Carl Hauch, who is vice president, stores, will form the “office of the CEO.”
“Parneros, 56, took the helm in April 2017 with a mission to pull the company out of a slump as it confronted heightened competition from online retailers. During his tenure, the company’s stock lost almost one-third of its value, dropping to its lowest point in about a quarter century in March. Parneros said on the company’s earnings call in June that "turnaround plans take time," Matthew Townsend and Jennifer Surane report for Bloomberg.
Despite the disappointing results, his “departure creates a new period of uncertainty in the company’s corner office,” points out Phil Wahba for Fortune. “Parneros’s immediate predecessor Ron Boire was ousted in 2016 after less than a year after the company said he was not a ‘good fit.’ B&N founder Riggio served as interim CEO for a few months before Parneros, who spent most of his career at Staples, took over."
“Barnes & Noble has been battered by digital competition, most notably from Amazon.com, and has struggled with declining foot traffic, shrinking sales and store closures. Amazon is aggressively expanding into physical retail, with more than a dozen bookstores around the country and a growing number of pop-up stores, as well, as an expanded physical footprint through its acquisition of Whole Foods,” they write. “At the same time, there has been a surprising resurgence among independent booksellers, whose numbers have risen substantially in recent years after decades of decline,” they add.
“One publishing executive, who asked not to be identified, said he had been impressed by Mr. Parneros, who he said brought much-needed energy to the struggling chain. ‘He was open, collaborative, and I had the greatest hope for the chain based on what he was bringing. It’s just appalling news,’” he tells the Wall Street Journal’s Maria Armental and Jeffrey A. Trachtenberg.
“John Tinker, an analyst with Gabelli & Co., described Mr. Parneros’s departure as ‘a major surprise’ and said it was particularly disappointing because it comes at a time when the bookseller is working on developing a new, smaller store prototype to better compete while reducing costs. Barnes & Noble plans to open five new prototype stores in fiscal 2019, all of which will be smaller than its typical 26,000-square-foot superstores,” the WSJ piece continues.
Kantar Retail analyst Robin Sherk tells Bloomberg’s Townsend and Surane that B&N needs to become more of a destination. “'It’s not that people aren’t buying books, it’s not that people don’t want to buy in the categories that they play in,' Sherk says. 'You have to offer them an experience they want if you’re really going to succeed in this space.'"
In a Knowledge@Wharton piece last month titled “Can Barnes & Noble Survive?,” several academic observers proffered bleak prospects for success for a chain that “once played the role of disruptor” but now “is considered a dinosaur."
“They’ve tried lots of different things from devices to experiences to broadening the merchandise. Nothing’s working," says Wharton marketing professor Peter Fader. "At this point, they haven’t found that hook to save the business, nor have they found the vision or leadership to give people any confidence in it."
Another Wharton marketing professor, Thomas Robertson, meanwhile, sums up what in his opinion B&N — or any retailer, for that matter — should be doing going forward: “You have to find ways to reach out to [the Millennial generation], and it is about being omnichannel — it has to be a seamless experience,” he says. “Also, if you’re going to reach Gen Z or Gen X, it is all about mobile.”
Should Barnes & Noble fail, Fader envisions someone buying the brand name down the road and bringing it back as “some small local curated thing.”
“Maybe 20 years from now it’ll be a throwback and people will remember the good old days,” he says. “But they have to die to be reborn.”