Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Barnes & Noble Sank 12% in August

By Timothy Green – Sep 8, 2016 at 11:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When a CEO only lasts a year on the job, investors are right to be concerned.

Image source: Barnes & Noble.

What happened

Shares of bookseller Barnes & Noble (BKS) dropped 12.4% in August, according to data provided by S&P Global Market Intelligence, driven by the surprise announcement that CEO Ronald Boire had been fired.

So what

On Aug. 16, Barnes & Noble issued a press release announcing the departure of its CEO. According to the release, the board of directors determined that Boire was not a good fit for the company and that it was in the best interests of all parties for him to be replaced. Executive Chairman Leonard Riggio and other members of the executive management team will assume the duties of the CEO during the search for a replacement.

Barnes & Noble has been suffering from declining revenue for years as book sales moved online. Boire joined Barnes & Noble in September of last year following the company's spinoff of its college bookstore unit. The move to replace him just one year after his hiring came as a surprise to investors, suggesting that the company may be in worse shape than previously assumed.

Now what

Barnes & Noble stock has gained back some ground so far in September, surging on a favorable assessment in Barron's and news that sales at bookstores grew by 6.1% during the first six months of the year.

BKS Chart

BKS data by YCharts.

It's unclear exactly why Boire was dismissed, with uncertainty surrounding his departure no doubt adding fuel to the fire. The new CEO will have the challenge of returning the bookseller to growth, a task that will not be easy.

Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of Barnes and Noble. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Barnes & Noble Stock Quote
Barnes & Noble

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.