Among the few things present over the period during which Barnes & Noble Inc. (NYSE: BKS) has collapsed is founder and sometimes CEO, sometimes chairman, Leonard Riggio. Based on a new disclosure of same-store sales over the holiday, Barnes & Noble is in a decline that makes it look more and more like failed retailers Macy’s, Kmart and Sears.
Barnes & Noble said that same-store sales fell 9.1% over the nine-week holiday period that ended on December 31. The figure is comparable to that posted recently by the Sears division of Sears Holdings Corp. (NASDAQ: SHLD), a retailer that some analysts believe cannot survive long term. Online sales for the largest book retailer in the country rose only 2%, against a retail industry average of 10% to 12%. Barnes & Noble has hit a tipping point from which it may be unable to recover.
Riggio can claim he is the grandfather of the bookstore chain business. He founded Barnes & Noble in 1986. He is also a primary architect of its downfall. Even though Barnes & Noble has had several chief executives since the company was started, as the largest shareholder, he has been the de facto leader of the company. And Riggio made our list of 2016’s worst CEOs for a reason.
Riggio’s first misstep is that he missed the move of book sales to e-commerce. Amazon.com Inc. (NASDAQ: AMZN), which mostly sold books in its early years, was founded in 1994 and was a small company for the first years of its existence, while Barnes & Noble towered over the sector. Riggio never put the power of its brand and balance sheet into a web-based business. That failure is particularly telling today.
Riggio almost missed the turn toward e-readers. Barnes & Noble’s Nook was a poor competitor to the Amazon Kindle. Once again, Riggio did not leverage his brand online and use the massive footprint of his stores to push the Nook hard enough to make is successful.
The net effect of Barnes & Noble’s most recently released figures is that its shares fell over 6% to $10.65. That puts the stock price down 70% over the past 10 years. Its market cap has fallen to $775 million, against annual revenue of over $4 billion.
The only important common factors over that decade are Barnes & Noble’s brand and Leonard Riggio.