Did Borders.com Results Lead to Barnes & Noble Chief's Exit?

The timing of this one is just really odd.

Barnes & Noble Inc (BKS), the largest U.S. specialty bookseller, said on Tuesday that the chief executive of its online business resigned.

Barnes & Noble said Marie J. Toulantis's duties have been assumed by E-Commerce vice president Tom Burke and Kevin Frain, its chief financial officer. The bookseller said Toulantis will remain with the company as a consultant.

Now, this comes just a week after rival Borders' (BGP) online results became public and BKS said it would not be able to finance a deal for Borders.

The graphs on the previous post show Borders online traffic and conversions surging since going live in June through July 26. One must assume this trend has continued and that Borders' gains are coming at the expense of Barnes and Noble, not so much Amazon (AMZN).

Here is the chart:

Borders did a great job on the site and it is being marketed to Rewards members brilliantly. Its current conversion rate of 5% is up from 2.5% when it was part of amazon and now just behind Barnes & Noble's 5.9% after only 8 weeks (as of 7/26).

Borders is scheduled to report next week, the 28th. I have a feeling, and I hope the analysts on the call ask a ton of questions about the online results, investors will be happy.

Disclosure ("none" means no position): Long BGP, none.

Comments

[opineone:]

Toulantis left because Borders finally put up a web site---
about 7 years late!!!!!!!!!! Hardly. You are expressing
a guess and should label it as such.

2008 Aug 20 12:18 PM

[dingojoe:]

I hope analyst do ask lots of questions, but BGP isn't very high profile and the questions asked last conference call weren't very probing, so don't hold your breath.

It's my understanding that the Borders website is now being used in store by employees to order books for the customer when the book is not in stock in the store (whereas previously it was done from the traditional in-store system). Furthermore, given that the new Borders business model involves fewer titles in-store that means greater reliance on whatever system of special ordering they are using. So, the question are, how much of the internet usage/ordering is store driven? and how much of it is replacing lost sales at the store level due to the decrease of titles carried in store?

I actually would have expected the conversion rate to be higher if Borders is utilizing the system in store to order for customers, but the rollout of the system to stores may have been staggered, so that may explain the big one month jump and why the conversion rate isn't higher.

Still don't like BGP or Sears/Kmart for that matter as they are all the poorest retailer in their respective segments. SHLD may have value once liquidated, but I just don't see any rabbitt for Borders to pull out of it's hat.

2008 Aug 20 12:19 PM

[webbo:]

I would ask what happened with Borders stock on Monday, one of the few stocks to be up on a rough market day.
Approx 800,000 volume on an average day, soon as the bell rang in the morning there was two big spikes and resulted in 1.4 million volume on Monday.
Who bought in? or shall I say, who just bought out?

2008 Aug 20 01:48 PM