Book shoppers of the world rejoice! In a turn of events worthy of Shakespeare, or at least Mario Puzo of Godfather fame, Barnes & Noble (BKS) took actions that just might make it possible for a generation of readers to have the experience of shopping in a real live brick and mortar bookstore.

For the last several years there’s been a battle for Barnes & Noble’s soul. In one corner stood 72-year-old chairman and founder Leonard Riggio. A legend in retail, Riggio has been fighting to keep the chain focused on stores rather than jumping into the e-reader tablet wars.

Though he still owns 30% of the company’s stock, Riggio had been pushed to the side strategically in favor of former computer hardware executive and now-ex CEO William Lynch. It was Lynch who drove the company's costly expansion into handheld Nook readers.

Last night Riggio emerged victorious when Barnes & Noble announced Lynch’s immediate resignation. Overnight Riggio went from figurehead Chairman to unquestioned king. All other executives at Barnes & Noble will now report directly to him and the company says it has no immediate plans to find a new CEO to replace Lynch.

The final nail in Lynch's coffin was in late June when Barnes & Noble reported a staggering $477 million loss on Nooks and announced that it would be outsourcing the manufacturing of future e-readers. As discussed on Breakout at the time, the Nook debacle strengthened the hand of Barnes & Noble's founder Leonard Riggio and his push to keep the company focused on the chain's 675 stores.

The change of course is dramatic, to say the least. "Barnes & Noble as we know it no longer exists," says Brian Sozzi, CEO & chief equities strategist at Belus Capital Advisors, in the attached video. Sozzi doesn't think we'll hear much from B&N in regards to strategic direction for another few months when he expects the announcement of a buyout deal for the stores, if not the entire company.

It's hardly a secret that Riggio wants to be the one in charge of the brick and mortar stores. In February the 72 year old founder notified the SEC that he intended to make an offer for all the assets of the retail business of B&N. No financial terms for the offer were disclosed and the company has refused to comment on the matter beyond announcing the creation of a strategic committee to analyze the offer.

Barnes & Noble isn't going to look for a replacement for Lynch until it has finished reviewing its strategic options. Obviously William Lynch and everyone connected to the Nook at Barnes & Noble loses from the changes. Users of the Nook, what few there are, should continue to get support for existing hardware but they probably shouldn't plan on buying the next generation of the product.

The list of winners in Riggio's power play is much more interesting:

Leonard Riggio

Riggio is an old-school merchant who has long been disdainful of the company's move into a digital service. Not only has his view been exonerated, but Riggio is now the unquestioned king of the company he founded in 1965. CEO Lynch has been replaced as the head of Nook by Michael Huseby who previously served as the company's Chief Financial Officer. CFO's are best suited for disposing of assets, not turning them into moneymakers.

Huseby reports to Riggio as does Mitchell S. Klipper who is the new Chief Executive of Retail Stores.

With a 30% stake in the company and unquestioned leadership of strategic direction the future of Barnes & Noble rests entirely in Riggio's hands.

Book Lovers

Barnes & Noble has nearly 700 stores. Last year the company closed 18 locations and opened two. In the wake of the death of Borders, Barnes & Noble is the last book retailer standing with first pick on the prime available locations. The chain is troubled, as all brick and mortar retailers are to some degree, but it's still making money.

Riggio will invest in the stores. He may have to close some sites but your local B&N is likely to exist a year from now. The chain is still in trouble but it's not going down without a fight.

Barnes & Noble Shareholders

Riggio has a stated desire to buy the retail segment of Barnes and Noble. That puts a bid under the shares to some extent. As of today B&N has a market cap of about $1 billion. Even Sozzi who thinks Target (TGT), Whole Foods (WFM) and Wal-Mart (WMT) will be picking away at Barnes & Noble's abandoned real estate within a decade concedes that the existing store base is worth more than what the company's shares are trading for today.

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