Barnes & Noble Announces Major Reorganization As Nook Sales Are Way Off

Michael Teague  |

In a move that is not entirely surprising, the Board of Directors of Barnes & Noble (BKS), the last remaining brick-and-mortar bookstore chain, announced the immediate resignation of CEO William Lynch on Monday.

News of Lynch’s departure was accompanied by an organizational shake-up which has resulted in Michael Huseby becoming the company’s President, as well as the CEO of NOOK Media LLC, while Vice President Allen Lindstrom has been moved up to the position of Chief Financial Officer.

The restructuring comes on the heels of the release of terrible sales figures for the company’s once-dominant electronic book reader, the Nook. Barnes & Noble reported a 34 percent decline in Nook sales for its recently ended fiscal fourth quarter, and while the company will continue to manufacture less expensive black and white e-readers, it has said that it is seeking to outsource the production of higher-end color versions of the Nook to bigger companies, one of which is expected to be Microsoft (MSFT).

The Nook has more or less been overtaken by its competitors, Apple’s (AAPL) iPad and increasingly, Amazon’s (AMZN) Kindle and Kindle Fire readers that have more or less dominated the e-reader market over the last few years, while capturing a larger share of the tablet market in general. In some respects, at least from the standpoint of consumers and bibliophiles, the Nook has some definite advantages over the competition, especially when it comes to free book downloads and even more so with regard to the availability of obscure and/or specialized offerings that are not available elsewhere.

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But these perks have done little, if anything, to help it beat back its vastly better-funded adversaries, and this has happened despite the company’s efforts to make its Nook more relevant to changing market conditions. Furthermore, a software update and price-cut for the Nook HD in early May that brought Google’s (GOOG) Play store to the device allowed users to access a much wider array of apps than previously offered by Barnes & Noble alone, but did not translate into the much-expected and desperately-needed increase in sales sought after by the company.

The company’s current predicament mirrors the same predicament that it itself was accused of creating for independently-owned bookstores once upon a time, when vast numbers of Barnes & Noble and Border’s outlets dotting the American landscape across city and suburb alike ran droves of smaller shops out of business. The dominance of Amazon in book sales over the past decade, as well as its increasing role in publishing, are largely credited with both the bankruptcy of Border’s Books. The dominance of its Kindle devices must be added to this list of reasons for Barnes & Noble’s woes, which only seem to be getting worse.

Shares for the beleaguered bookshop ended the regular trading day on Monday down 0.11 percent, but after hours trading saw a sharp decrease of nearly 5 percent to $16.83. While this still gives the company a $5 cushion from its 52-week low of $11.17, Barnes & Noble will likely be under the gun until a viable strategy can be formulated.

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