By Phil Wahba
CHICAGO (Reuters) - Barnes & Noble Inc promoted the executive who spearheaded the development and launch of its Nook electronic reader to be its new chief executive, as the largest specialty U.S. bookseller seeks to accelerate its push into digital books.
William Lynch, whose appointment was announced on Thursday and is effective immediately, called Barnes & Noble's e-books business "key to our future" on a conference call.
Lynch, 39, joined Barnes & Noble in February 2009 and oversaw its web business. Last October, he presided over the company's launch of the Nook, which competes with Amazon.com Inc's market-leading Kindle and Sony's e-book reader.
After several production delays during the fall and into the holiday season, the Nook only became available for in-store orders in February.
Barnes & Noble's founder and Chairman Leonard Riggio explained Lynch's appointment by saying the retailer needed to "pick up the pace" of its shift to e-books as more bookselling gravitates to the web and e-readers. Riggio said that Lynch had quickly put the digital business on the fast track.
The management shifts come at a time when Barnes & Noble's comparable sales at its namesake stores continue to decline. They fell 5.5 percent during the holiday quarter, though online sales surged 32 percent.
Barnes & Noble is also under fire from shareholder Ron Burkle. The billionaire investor has sought to gain a controlling stake in the company and criticized its management structure led by the controlling Riggio family.
Shares of the company rose 0.7 percent on Thursday.
STRATEGIC SHIFT
Standard & Poor's Equity Research analyst Michael Souers maintained his "sell" recommendation on the stock, saying its shares remained expensive, but praised the appointment.
"We think this change clearly demonstrates a strategic shift for the company as it works to establish itself as a dominant player in e-commerce and distribution of digital content," Souers wrote in a note.
The bookstore chain's outgoing CEO, Stephen Riggio, who is also the chairman's brother, will retain the role of vice chairman.
Stephen Riggio said on a call last month that Barnes & Noble could reach the same market share in e-books as it has in physical stores "literally overnight."
The company also promoted Chief Operating Officer Mitchell Klipper to CEO of its retail group. Lynch said on the call that the company's bookstores were as important as ever and crucial to driving sales of its Nook.
The Riggio brothers and other insiders own about 31 percent of the company's shares.
In January, investor Burkle, whose investment firm Yucaipa Cos owns 18.7 percent in Barnes & Noble, had asked the board for permission to double his stake in the company without triggering the poison pill provision. However, the board rejected the request.
Rival Borders Group Inc also replaced its CEO this winter, when Ron Marshall stepped down after only one year. Its Chief Merchandise Officer Michael Edwards is currently serving as interim CEO.
(Reporting by Phil Wahba; additional reporting by Nivedita Bhattacharjee in Bangalore, editing by Dave Zimmerman)
