The founder and chairman of Barnes & Noble moaned on the quarterly earnings conference call about the “terrible” climate for retail. Leonard Riggio said traffic in the chain’s 638 stores was “close to a historic low point.”
Same-store sales were down 6% year over year. Revenue was $45 million shy of analysts’ expectations. Surely it’s that darned retail climate, which Mr. Riggio called “one of the worst I have ever experienced in the 50 years I have been in this industry.”
He also tried to blame politicians. “The current trend can be traced precisely to the current election cycle, which is unprecedented in terms of the fear, anger and frustration being experienced by the public.”
In short, Mr. Riggio came off sounding not only stupid, but the special Macy’s strain of stupid. He tried and failed to make it sound like being in the book business had nothing to do with the results. B&N sells at high-overhead stores in major malls. Amazon.com also sells books — at lower prices, delivered to your house. You pick the winning business model.
Amazon is also having success in e-books. Paul R. La Monica of CNN Money nailed the situation: “The success of the company’s Kindle is also a big reason why Barnes & Noble’s Nook e-reader has been such a huge flop. Nook sales – which include the device as well as digital books and magazines – plunged 24.5% in the most recent quarter. Simply put, Amazon is eating Barnes & Noble’s breakfast, lunch and dinner – and Sunday brunch and midnight snacks while we’re at it.”
Mr. Riggio is 75. He had planned to retire but recently kicked out his CEO after less than a year on the job. The ex-CEO wanted redesigned stores that included restaurants. B&N already has a partnership with Starbucks.
Nobody knows what will happen now. Perhaps the company, which has relatively little debt, will be taken private. It has been speculated that Starbucks might make an offer. Maybe B&N will follow its former competitor, Borders, and just go away, leaving books to be sold exclusively at modest shops in strip malls.
I love books. They contain much knowledge. But public tastes have changed. Selling a book at any level, wholesale or retail, is tough. Maybe Mr. Riggio should take a different tack and convert B&N stores into giant liquor warehouses. The retail climate he speaks of is much better in that space. For that, politicians might shoulder a smidge of blame.