Barnes & Noble (BKS) Chooses Web Guy for CEO

Barnes & Noble, (NYSE: BKS) the largest U.S. bookstore chain, promoted the head of its Web site, William Lynch, to CEO. The move underscores their emphasis on digital retail.

Former CEO Steve Riggio, the brother of founder Leonard Riggio, will remain vice chairman. Lynch, 39, joined Barnes & Noble in February 2009 and helped introduce its Nook electronic reader in October. The company has been trying to compete with Amazon.com maker of the Kindle. Barnes & Noble this month created a position to oversee the development of paid digital content from newspapers, magazines and other publishers for hand-held reading devices.

“It’s a daunting challenge with the competitors already in the marketplace,” said Michael Souers, an analyst at Standard & Poor’s in New York, who has a sell on the shares. “Amazon is a major player, Sony, and now Apple is competing in the space.” Barnes & Noble, which has more than 1,300 bookstores, is up around 3% for the day. The shares have gained 17 percent year to date.

Ron Burkle, founder of Los Angeles-based Yucaipa Cos. and Barnes & Noble’s largest outside shareholder, has criticized management for purchasing Barnes & Noble College Bookstores last year from Leonard Riggio. Burkle, has been blocked by a poison-pill provision from increasing his stake in the bookseller, which stood at 18.7 percent.

Last month, Barnes & Noble posted a fourth-quarter forecast that trailed analysts’ estimates. The third-quarter profit declined and same-store sales fell 5.5 percent.

Barnes & Noble doesn’t break out sales of digital content. Sales at the company’s Web site rose 32 percent to $210 million in the quarter that ended Jan. 30, accounting for about 10 percent of total revenue.

Lynch came to the company from Home Shopping, where he was executive vice president of marketing and general manager of HSN.com.

Barnes and Noble has fared better than fellow book store, Borders. Borders stock was $26 in 2005, and trades now at $2.26. Barnes and Noble’s stock went from a high of $46. in 2005, and is presently selling at $22.77.

The bookstore biz has clearly seen better days. Now, if all the deadbeat college students who hang out at their coffee bar, doing their homework, occasionally ordered something to eat, the Co. might fare a little better. Fat chance!