|Barnes & Noble Promotes the Head of Its Web Division to Chief Executive|
By MOTOKO RICH
Determined to stake out a strong digital future, Barnes & Noble on Thursday named William Lynch, president of the company’s Web division, as chief executive, succeeding Stephen Riggio, who will remain as vice chairman.
In the unexpected move, Mr. Lynch, 39, was named to the top spot a little over a year after arriving at the company with no experience in the book business. He is also the first person outside of the Riggio family to be named chief executive since Leonard Riggio, the company’s chairman, bought the company in 1971. He appointed his younger brother, Stephen, 55, in 2002.
“There really has not been much change here in all these years,” Leonard Riggio said in an interview at the company’s corporate headquarters in Manhattan. Because of Mr. Lynch’s background in e-commerce and technology, Mr. Riggio said, “by appointing him, it sends a signal to the marketplace that we are serious about the business and the way this business is evolving.” But he added that neither he nor his brother was retiring and both would continue to act in advisory roles.
Barnes & Noble, the country’s largest bookstore chain, has suffered a decline in print book sales as e-book sales have grown significantly. In its latest quarterly financial report, the company said that same-store sales had fallen by 5.5 percent compared with a year earlier while sales at BN.com rose 32 percent.
The company has also come under recent pressure from the investor Ronald W. Burkle, who wants to raise his stake in the company to 37 percent and has protested poison-pill provisions that Barnes & Noble has imposed to prevent any single investor from holding more than 20 percent. Mr. Burkle has also complained that the Riggio family has “effective control” of the company, which went public in 1993.
Mr. Lynch, who joined Barnes & Noble from HSN.com, also previously held executive positions at Gifts.com and Palm. During his short tenure at Barnes & Noble, Mr. Lynch has helped the company acquire Fictionwise, an online retailer of e-books, has overseen the introduction of the company’s own e-bookstore, and headed the introduction of the Nook, the company’s electronic reader, to compete with Amazon’s Kindle and other devices.
Some industry analysts were surprised that Mr. Lynch had been promoted so soon. It is “the corporate succession equivalent of moving in with someone a week after the first date,” said Michael Norris, senior analyst at Simba Information, which provides research and advice to publishers.
He said he was reassured by the company’s announcement that it had also appointed Mitchell Klipper, 52, the chief operating officer, as chief executive of the company’s retail group, which includes both the general retail and college bookstores. Mr. Klipper has been with the company 23 years.
But other analysts said that Barnes & Noble also needed to show investors that it was not going to rely on being the largest bookseller in the country.
“I think the Riggios have done a very good job in real estate and winning the bookstore strategy, but the bookstore strategy is in question because of technology,” said David Schick, managing director at Stifel Nicolaus in Baltimore.
In the digital world, he said, “the pace of decision-making has to go up if you want to compete and ultimately win, so what Barnes announced today was a big nod to that.”
Although the company is clearly emphasizing its digital future, Leonard Riggio said he did not foresee significant store closings. The company, which has 723 general retail bookstores and operates 639 outlets through its college bookstore subsidiary, is unlikely to open new locations. Mr. Riggio said that in the next two years, “the net number of stores will not change much.” After that, he said, “we will have to see.”
Mr. Lynch said the physical bookstores would remain “the most vital channel in terms of marketing books and up-and-coming authors.” But the company is trying to gain a larger role in e-books, where it still clearly trails the industry leader, Amazon, the biggest e-book seller in the United States.
The company has tried to emphasize the competitive advantage of physical stores — consumers can now buy Nooks in the stores and can download free content there. Soon they will be able to wirelessly browse full e-books while in the physical stores.
The company encountered some supply problems for its Nook during the holiday season, but Mr. Lynch said it was now the biggest-selling product at Barnes & Noble. The company has also announced plans to offer an application on Apple’s forthcoming iPad tablet and has signed on to be the e-bookstore that will work with expected e-readers from Samsung and Plastic Logic.
His appointment was welcomed by the publishing world. “I think this is a very smart move for Barnes & Noble, given the transition in this business from print to digital,” said Brian Murray, chief executive of HarperCollins Publishers.