The revelations disclosed in former Barnes & Noble CEO Demos Parneros’s lawsuit, filed Tuesday and charging the company with defamation and breach of contract, left publishers mystified at how the nation’s largest bookstore chain will turn around its financial fortunes.
“Indecipherable” was the one-word email response from the president of an independent publisher when asked about the recent events at B&N. “I don’t know what to make of the news,” another executive at a publisher said. “It’s still unsettled over there.”
The lawsuit, in which Parneros seeks to win over $4 million in severance and other payments, disclosed that a deal to sell B&N to a “book retailer” fell through in June, while also pointing to turmoil in its executive ranks and charging that B&N founder and chairman Len Riggio is reluctant to turn over the reins of the company to a new CEO. The suit also demands that B&N take action clear up the perception he was fired because of sexual harassment charges.
B&N responded vigorously to the allegations in the suit, releasing a statement that called the suit “nothing but an attempt to extort money from the Company by a CEO who was terminated for sexual harassment, bullying behavior and other violations of company policies after being in the role for approximately one year.”
Whatever the merits of the case, publishers said it is clear that the time has come for B&N to find new leadership, either by a sale of the company or finding a CEO with a new vision for the company. Since Parneros’s dismissal, the company has been run by the trio of Allen Lindstrom, chief financial officer; Tim Mantel, chief merchandising officer; and Carl Hauch, v-p, stores. Riggio remains executive chairman and will be involved in its management until a new CEO is found.
“B&N needs to take action and needs capital to do it,” one publishing executive told PW. “Clearly being acquired is one way to get that done. There are other ways, but something needs to happen.”
An independent publisher who viewed some of the charges in the lawsuit being made “by a guy who is really pissed off and wants his severance,” nonetheless agreed that B&N “needs to create a smooth transition for Len.”
Executives were not against a sale, as long as it isn’t to Amazon, a possibility that is a long shot at best given the tumultuous history between the two companies and the chance such a deal would bring up antitrust issues. “I think it’s time {B&N} gets a new owner,” the head of an independent publisher said. “One that’s interested in being in the book business and has a proper management team. Someone like Indigo would be great.”
Indeed, Indigo, the Canadian book retailer that now bills itself as cultural department store, was the guess of choice about which retailer had made an offer for B&N. An Indigo spokesperson said the company doesn’t comment on such speculation. The company, which had an increase in sales and earnings in the fiscal year ended March 31, 2018, is set to open its first U.S. store next month and said it has plans to open as three to five stores.
Several publishers said the frustrating part of Parneros’s departure is that it finally looked like B&N had a plan in place to move forward. Parneros was “candid about the issues B&N faces,” one executive said, adding that the plan he laid out seemed workable if given some time. All publishers would like to see the next B&N CEO have book experience. And there is one other characteristic they would like to see—a CEO who is actually running the company.
