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After months of will they/won’t they speculation on whether luxury department store chain Barneys New York will be forced to file for bankruptcy protection, it appears the retailer may be turning a corner. This week, The New York Post ran a story saying the chain’s owner, the Dubai-based investment firm Istithmar, is once again looking for a new CEO. Barneys has remained without a CEO for some time, as Istithmar struggled with falling sales, a $500 million debt load and takeover attempts by noted investor Ron Burkle, who already owns a large stake in the company.
The firm’s renewed interest in retail operations signals that Barneys is back from the edge, with a 20 percent increase in March same-store sales. Luxury retailers, in general, seem to be experiencing a moderate renaissance, as high net worth consumers start to feel better about their balance sheets. In fact, many consumer experts say shoppers from high income households will likely return to their pre-recession levels of spending relatively soon, while the average middle-income consumer will remain shell-shocked by the downturn for some time to come.

Barnes & Noble’s announcement this morning of a reshuffling in its top management ranks can be taken as a sign of the retailer’s committment to tweaking its business model to fit the changing times. As former CEO Steve Riggio moves to the position of vice chairman, the company will be led by new CEO William Lynch, who has served as president of Barnes & Noble’s Web site division since February of last year.
Lynch reportedly has had limited experience in the book selling business prior to joining Barnes & Noble, but he has a solid footing in e-commerce, having worked at HSN.com, Gifts.com and other e-commerce channels. Last year, he helped launch the nook, Barnes & Noble’s e-reader, to help the company compete with one of its main rivals, Amazon.com. His appointment to the CEO post makes clear that Barnes & Noble is ready to take on one of the biggest threats to its business: consumers’ growing reliance on electronic reading devices such as Amazon.com’s Kindle. Selling paper books through brick-and-mortar stores just won’t cut it anymore.
The fact that Barnes & Noble understands the dangers its facing and is willing to do something about it is an encouraging sign that it might be able to survive through a fundamental shift in the book selling business. If history has proved anything it’s that retailers too slow to acknowledge threats posed by new electronic devices eventually disappear from the landscape. We saw it first with the emergence of the iPod and other MP3 players, when a host of venerable music chains, including Virgin Megastores and Tower Records, went belly up. And it’s happening right this moment with movie rental chains. Movie Gallery filed for bankruptcy earlier this year. Raise your hand if you think it will ever emerge from Chapter 11. Even the sector’s number one player Blockbuster is considering filing, after the retailer was too late to respond to the convenience offered by online DVD rental service Netflix and DVD kiosk operator Redbox.
So Barnes & Noble’s desire to concentrate on its e-commerce division in the coming years makes plenty of sense. Personally, I’ve always loved both B&N and its main rival Borders, not just for the wide assortment of books they sell, but for the experience they offer inside their stores, where you can linger for hours leafing through the pages and drinking coffee without feeling the pressure to “buy or get out.” Here’s hoping both retailers will stay around for the long term.