A little more than a year ago, Barnes & Noble CEO James Daunt used the forced closure of nearly all of his physical stores to begin refurbishing the interior of each location, as well as to review each store’s title selection. Daunt had planned to remake the stores over an 18-month to two-year span, but the retail lockdown, coming less than six months after Daunt took over as CEO following the acquisition of B&N by Elliott Advisors, forced his hand.
While Daunt appeared confident B&N could weather the Covid storm, others in the industry were not so sure how much time the new owners would give Daunt to turn around the bookstore chain at a time when the viability of physical retail was being called into question. However, as bookstore sales have bounced back from the depth of last year’s slump (bookstore sales were up 30% in the first half of 2021 over the comparable period last year), publishers say B&N has been performing well. Simon & Schuster CEO Jonathan Karp credited Daunt with “revitalizing” the retailer, while HarperCollins CEO Brian Murray praised Daunt’s decision to remake the stores during the pandemic and for his ability to convince Elliott to keep investing in the business, adding that HC’s sales with B&N are up.
In an interview with Daunt from his U.K. office, where he has been managing both B&N and the U.K. chain Waterstone’s, Daunt said total B&N sales are up about 5% to 6% so far this year, compared to 2019, with book sales up by double digits. The pandemic has continued to hurt B&N’s café and newsstand results, but books and other core areas, such as educational games, puzzles, and workbooks, have done well, Daunt said. Urban areas are having the hardest time recovering from the pandemic, and New York City in particular, Daunt said, has been “a drag” on the overall rebound.
Unlike his first few months on the job, Daunt said trends now seem to be in B&N’s favor. Book sales have remained resilient during the recession, interest in reading is up, all B&N stores have undergone at least one round of refurbishing, and rents are down. The most important change Daunt has made to B&N—giving local store managers more control over what, and how, they sell in their stores-has kicked in. Daunt acknowledged that most stores will carry many of the same titles, but where the books are placed, and in what quantities they are ordered, is now left to managers. “Managers are in charge of the way the titles are presented,” Daunt said. The goal is to make sure books that are selling well have the necessary quantities, and books that aren’t working are returned quickly. Resupplying stores is a “central focus,” Daunt said, and the company has invested in its distribution centers and people to make its internal supply chain operate more efficiently. Lowering returns has been one of Daunt’s priorities since he took over B&N, and while progress has been made, he said there is still room for improvement.
Daunt gave store employees full credit for getting B&N turned around, acknowledging the difficult conditions they were working under during the depth of the pandemic while also learning a new way of working. He is resolute in his belief that the key for B&N to succeed is to empower store managers. Once the managers have the right tools and support, the best thing to do is “to get out for the way,” he said.
Staying out of the way doesn’t mean more change isn’t coming, however. The stores are still adding new fixtures and are beginning to get ready for the fall by adding such things as new cash wraps. This spring, Elliott bought the stationery and gift retailer Paper Source and put Daunt in charge. Daunt said he will use B&N’s “stable mate” to create better, though not necessarily bigger, stationery sections. At the other end of the spectrum, Daunt remains committed to B&N’s Nook business; earlier this year B&N introduced a new Nook tablet in partnership with Lenovo, and he expects sales for the device to build.
B&N has opened six new stores since Daunt took over, and he said he expects to open eight more over the next month. B&N will also continue to close underperforming outlets, and Daunt expects to finish the year with about the same number of locations—about 625 stores—as B&N had at the start of the year. (“Sometimes staying even is moving ahead,” he said.) In 2022, however, Daunt hopes to open new stores “in decent numbers” and to have a net gain in outlets. “We make good tenants for landlords,” he said.
Daunt is among those industry members who believe interest in reading will remain high even as other activities that had been closed reopen. He looked back on how excitement over the Harry Potter books created new book audiences and said while some new readers may drop off, the majority will remain. He noted that the most enthusiastic, and loyal, shoppers at B&N’s physical stores have been teens and young adults and that the energy they bring to the stores is “fantastic.”
Given the number of positive trends and what Daunt called the “stellar lists” from publishers, including literary authors that B&N is well positioned to sell, Daunt is looking for a good close to 2021.
