B&N: How the mighty are falling

Barnes & Noble, once one of a number big box bookstores, now finds itself fighting for survival–again. This time, more than just falling sales and rotating executives are at play. For the fifth(?) time in about as many years, B&N lost its CEO. This time, Demos Parneros was fired instead of resigning or coming to an “understanding” with the company. When his termination was announced, almost everyone figured there was more to the story. There is and it looks like it will play out in court.

Initiall, B&N didn’t give a reason for terminating Parneros. But the crumbs were there to follow. There’d been no noise about him finding another job elsewhere. But he was out without any sort of severance package. Hmmm, inquiring minds looked for an explanation and one came to mind, especially in today’s climate: sexual harassment. Yet there was nothing from B&N to explain.

Until this week.

Parneros has filed suit against B&N. He claims, among other things, that B&N, specifically Leonard Riggio, fabricated allegations against him, damaging his reputation in the process. You can see Parneros’s filing here and B&N’s response here.

What does this mean for B&N, its employees, customers and publishing in general? Beyond being yet another chapter in the company’s ongoing soap opera, it means the company’s focus is being taken off its survival, where it belongs. The publishing industry has to be worried, at least it should be. If this does go to court and if it gets as nasty as I anticipate, more than just the allegations about Parneros’ alleged sexual harassment will come out. Parneros, as CEO, was in position to know the intimate details of B&N’s business dealings. He knows how Len Riggio continues to try to run the company even though the founder is no longer CEO. It might all make for great entertainment but, damn, it’s not something shareholders want to watch playing out in public.

Will this lawsuit bring down the company? Probably not. But we’re already hearing noises about B&N shopping itself around again. This has happened before. We often hear it every time the company loses a CEO or other high ranking executive. Riggio talks about it and then takes the reins of the company again until another “leader” is found. I don’t know if events will run along this same course once again, but it wouldn’t surprise me if it did.

One thing is sure. B&N is a company in trouble. There is something wrong, whether it is in the boardroom or in company culture. Why else has it burned through so many high level excess in such a short period of time? There is no steadying hand at the helm. There is no one its suppliers, employees and customers knows will be there day in and day out to lead the company and save it. All they have been doing for years now is bailing water. That water is pouring in now instead of trickling and it will take a miracle to save B&N in the long-term.

That miracle might be the boardroom finally finding someone who will stand up to Riggio and who will pay attention to the changes in the industry and in the demands of their customers. It might come in the form of another company coming in and buying it out. Otherwise, I fear we will see B&N go the way of Borders and so many others.

For the moment, keep your eye on the courts and on what happens in the current sage of Parneros vs Riggio et al.

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