The firing of Barnes & Noble CEO Demos Parneros late Tuesday afternoon—just as most industry members were getting ready for the Fourth of July holiday—stunned publishers and left them wondering where the industry’s most important bricks-and-mortar retailer will turn to for a leader who can turn around B&N’s sagging sales.
In announcing the immediate termination of Parneros, B&N said his dismissal was for “violations of the Company’s policies.” While not saying what those policies were, B&N said his termination “is not due to any disagreement with the Company regarding its financial reporting, policies, or practices or any potential fraud relating thereto.” In addition to being fired immediately, Parneros will not receive any severance, B&N said. B&N said Parneros’s removal was undertaken by its board of directors, who were advised by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Parneros was named CEO in April 2017 after serving briefly as COO of the company. He replaced company founder Len Riggio, who had been serving as CEO after Ron Boire was fired in August 2016, after less than one year on the job, for what B&N described as “not a good fit for the organization.”
While the search for a new CEO takes place, B&N has appointed a leadership team of Allen Lindstrom, chief financial officer; Tim Mantel, chief merchandising officer; and Carl Hauch, v-p, stores, to lead the company. Riggio remains B&N executive chairman and will be involved in its management, B&N said.
While Parneros was unable to turn around B&N’s downward sales trend during his brief tenure, publishers were frustrated to see him go. “It is hard to fix things with a revolving door at the top,” one exec said. Another noted that Parneros had “expressed the best sense of urgency of recent CEOs” about the problems B&N is facing, including the inefficiencies in its supply chain. This executive also thought that Parneros had laid out a “reasonable plan” that looked not only to cut costs but for ways in which B&N might start improving its comparable store sales. Among Parneros’s turnaround initiatives: opening five prototype stores that will average about 14,000 sq. ft. this fall as part of his intention for B&N to open more stores than it closes this year, something it has not done in a number of years.
Another executive noted that one of the biggest disappointments about Parneros ‘s firing was that he had “made his way through the learn-about-books phase and was starting to engage with us in a more strategic way, really thinking about their customer base and what will keep the stores relevant in the long term. Now we start over from scratch, again. I’m also concerned that they will continue to prioritize cost cutting and margin, which are understandable areas of focus when revenue is eroding, but should not be the top priority. The absolute resolute focus for them needs to be on books and bringing customers into the stores. Everything else is secondary.”
Another executive also pointed to his hope that the next CEO would have “the ability to lead for the long run while having the courage to face short-term business challenges. The past four CEOs have looked for short term ‘wins’ using worn-out retail and supply-chain strategies that weren’t appropriate for the current bookselling environment.” He added: “B&N is caught between resilient independent booksellers who have better tools and business skills than ever before and, of course, Amazon and online retail. Neither their stores nor online presence have adapted well to the new bookselling landscape. The next CEO has to know where bookselling is going and adjust the company accordingly while satisfying the pressures of an increasingly dire financial and sales situation.”
Parneros, and Boire before him, were both brought to B&N from companies outside of bookselling, but a number of industry execs contacted by PW said bookselling experience, or at the very least knowledge of the book business, is a trait that they would like to see in the new CEO. “With the repeated hiring and firing of people from outside of the book business, B&N is not grappling fully or effectively with the significant problems it faces: that the stores can’t compete with the convenience and price of Amazon on the one hand, while they can’t compete with the curated quality of an indie on the other,” this publishing executive said. “What the new CEO needs to do,” the exec added, is to articulate “a clear retailing statement that gives customers reasons to shop unique to B&N.”
One publisher said he would like to see more transparency about why Parneros was terminated, so publishers can be reassured it wasn’t a sign of “Len not being able to let go.” Another said he hopes Riggio and the board will give the next CEO enough support to let him or her succeed.
While Parneros’s dismissal was certainly a setback for B&N’s turnaround efforts, a publishing exec observed that “B&N still has a chance to reenvision their stores as community magnets, bringing their customers together with entertaining stories and in conversation about vital issues. We’re all committed to helping them fulfill that vision, and we hope they get the leadership in place who can make it happen.”