Companies & Industries

Barnes & Noble Drops E-Commerce CEO for Eye-Shade Guy


Former CEO Lynch appears last year in one of B&N's New York outlets

Photograph by Victor J. Blue/Bloomberg

Former CEO Lynch appears last year in one of B&N's New York outlets

Barnes & Noble (BKS) Chief Executive Officer William Lynch resigned on Monday. This is not that much of a surprise. The largest U.S. bookstore chain has been losing its e-book war with Amazon (AMZN) for quite some time, which has put a drag on profits. In its last earnings report, the company reported a $118.6 million loss—more than double its losses a year earlier—and revenue from the sales of e-books dropped 9 percent. Amazon, meanwhile, is not just selling Kindles. It is creating new genres: surprise fiction hits such as Fifty Shades of Grey and straight-to-Kindle journalism from Byliner. There is no such thing as a “Nook Single,” and this is not an accident. Culture matters.

Lynch came to Barnes & Noble to take on the worst job in business—to make a company that does one thing start to do a different thing. Before he became chief executive, he was president of Barnes & Noble.com. He had run HSN.com, the website of the Home Shopping Network (HSNI), and IAC’s (IACI) Gifts.com. Lynch was the kind of guy you’d want to have build an online retailer. He had plenty of experience in e-commerce. Barnes & Noble didn’t.

For brick-and-mortar stores, making the transition to online retailing is very, very hard. We know this from Best Buy (BBY), Sears (SHLD), and H&M (HMB:SS). Moving into the tablet business is even harder. If your whole company knows how to do a certain thing, it is truly difficult to do something patently different. This is not endemic to Barnes & Noble or Lynch. Apple (AAPL) is a great device-maker that has had its struggles with software and cloud computing.

The man taking over for Lynch, Michael Huseby, knows how to do a thing. That thing is not online retail. He was previously Barnes & Noble’s chief financial officer and he came to the book seller after working at Cablevision (CVC), Charter Communications (CHTR), and AT&T (T). His expertise is in extracting rents, which is very different from excelling at selling things, online or otherwise. If the company can marry Huseby’s background in extracting rents with Barnes & Noble’s growing dominance in textbooks, college students would have every reason to be a little nervous. People with Huseby’s experience tend to like their products limited and expensive.

Meanwhile, founder and chairman Leonard Riggio has been trying to buy back the bookstore piece of Barnes & Noble. Maybe that’s the future. It’s easy to forget how the company’s stores turned the whole bookselling business upside down. Before Amazon was going to kill the book, Barnes & Noble was going to kill the bookstore. There was coffee and later there was free Wi-Fi, the restrooms were clean and it was a nice place to go.

It’s hard to know if the same business model, left to survive on its own, would work today. But it is what Barnes & Noble knows how to do.

Greeley-brendan-190
Greeley is a staff writer for Bloomberg Businessweek in New York.

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Companies Mentioned

  • BKS
    (Barnes & Noble Inc)
    • $22.24 USD
    • -0.24
    • -1.08%
  • AMZN
    (Amazon.com Inc)
    • $325.0 USD
    • 1.00
    • 0.31%
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