3 Min Read
NEW YORK (Reuters) - Barnes & Noble Inc (BKS.N) Chief Executive William Lynch resigned on Monday after he led a failed attempt by the U.S. bookstore chain to compete against the likes of Amazon.com Inc, Apple Inc and Google Inc in the e-reader and tablet markets.
Chairman and founder Leonard Riggio, the largest shareholder of Barnes & Noble, said the company is reviewing its strategic plan and announced a series of executive changes.
Chief Financial Officer Michael Huseby was named chief executive of the Nook Media unit and president of the parent company. Max Roberts, CEO of the company's education business, will report to Huseby. Huseby and Mitchell Klipper, CEO of the retail stores, will report to Riggio, Barnes & Noble said.
"As the bookselling industry continues to undergo significant transformation, we believe that Michael, Mitchell and Max are the right executives to lead us into the future," Riggio said in a statement.
Barnes & Noble, operator of the largest chain of bookstores in the United States, has been hit hard by Amazon, which has won market share by selling physical books more cheaply online. Amazon, the world's largest Internet retailer, inflicted more damage when its Kindle e-reader became a hit and e-book sales took off about five years ago.
Borders, another big bookstore chain, went bust in 2011. But Barnes & Noble survived to challenge Amazon in the e-book market. Lynch became CEO about three years ago and led the development of the Nook e-book store, e-readers and tablets.
Initially, the Nook business did well, earning Barnes & Noble about a quarter of the e-book market. However, the unit suffered heavy losses.
In late June, the company reported another quarter of dismal results, led by a 34 percent drop in Nook sales. It also said it would stop making Nook tablets, marking the end of a costly attempt to compete with Amazon (AMZN.O), Apple (AAPL.O) and Google (GOOG.O) in the tablet wars.
"Lynch was highly instrumental in making Nook a centerpiece in Barnes & Noble's broader operational strategy," Alan Rifkin, an analyst at Barclays, wrote in a note to investors on Monday. "With this announcement, Barnes & Noble is, in our view, signaling that it is attempting to reduce its dependence upon the Nook."
Lynch's sudden departure after just three years as CEO shows that Riggio and some of the directors on the board are increasingly impatient with the performance of Barnes & Noble, Rifkin added.
Its shares fell 2.6 percent to $17.20 in after-market trading on Monday.
In its most recent financial year, ended April 27, Barnes & Noble lost $475 million on the Nook business and it repeatedly had to cut prices on the Nook tablets and accept returns from retailers unable to sell the devices.
Reporting By Alistair Barr in San Francisco, Dhanya Skariachan in New York and Arpita Mukherjee in Bangalore; Editing by Carol Bishopric and Leslie Gevirtz