Crypto News: Bw Reads: Barnes & Noble is back

Welcome to Bw Reads, our weekend newsletter featuring one great magazine story from Bloomberg Businessweek. Today Adam Chandler writes about how the CEO of bookstore chain Barnes & Noble has liberated its stores from the corporate playbook. But his latest comments about AI reveal he’s still every bit a capitalist. You can find the whole story online (free!) here.

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To understand the strategy that’s brought Barnes & Noble Inc. back from the retail abyss, you first have to understand the pyramid. To a regular bookstore-goer, a pyramid looks like a simple stack of books piled on a display table. But, much like fingerprints or computer-generated passwords, no two pyramids on the dozens of tables inside each of the company’s nearly 750 locations are alike. Each book at a pyramid’s peak is a title chosen by a staff member at the store, intended to draw customers in closer, where the titles around it can intrigue them further. When customers take enough books off the pyramid, a decision must be made: Replace it with the same book or return the remaining copies to the shelves?

The method is now so revered among Barnes & Noble employees, every one of them I interviewed in reporting this story used the word “pyramid” as a verb, including the company’s chief executive officer, James Daunt, who explains that each display of books “has to be pyramided.” “I just want it to look nice and be interesting,” he says.

That might not sound like a radical act, but before Daunt took over leading the world’s largest bookseller chain in 2019, the company was beholden to a far more rigid display shape: the block. The setup was an emblem of Barnes & Noble’s transactional practice of making sweetheart store-placement deals with major publishers, in which blocks of books were stacked with the contractual precision of real estate developers maximizing air rights. Among the many drawbacks of this one-size-fits-all arrangement was that it failed to sell books effectively. The unsold books had to be returned to publishers, which meant fewer sales of other, more attractive books, wasted store space, lost employee time and eroded margins.

Barnes & Noble’s return rate to publishers has since dropped from more than 25% to about 8%. But more important, the merchandising shift is an example of Daunt’s idiosyncratic approach to corporate bookselling: Behave less like a big-box behemoth and more like a book lover. He has largely unshackled staff and stores from edicts and entrusted them to use their judgment to appeal to the specific communities they serve. As a result of that, along with Daunt’s knack for aggressive negotiating and strategic cost-cutting, a chain that seemed all but destined to become a relic in an era of screens and digital commerce is now thriving. It opened more than 120 stores in 2024 and 2025, many in locales that hadn’t had a bookstore in years.

Illustration: Anna Haifisch for <em>Bloomberg Businessweek</em>

This retail experiment was hardly guaranteed to work. When Elliott Advisors, the private equity firm, took the troubled chain private for $683 million in 2019 and appointed Daunt to turn it around, death watches were already underway. Decades of dwindling store counts, dipping sales, a disastrous e-reader saga, more than a billion dollars lost in market value, a halving of its workforce, existential competition from online retailers and diminished cultural relevance left the big bad book beast once villainized in You’ve Got Mail an almost sympathetic victim of the times. Four CEOs had cycled through Barnes & Noble over the previous six years, failing to fix it.

But Daunt’s résumé was unlike that of any of his predecessors. Almost three decades earlier, Daunt left a career in finance to open Daunt Books in his hometown of London. The indie bookstore, with its Old World reading room vibe and clever categorization of books according to country rather than genre, eventually became a tourist destination and literary shrine. (Its tote bags are a status symbol, reselling for a premium on eBay.) As the legend of Daunt’s bookstores grew, he was recruited to run the flailing UK chain Waterstones Booksellers Ltd. when it was bought by the eccentric Russian billionaire Alexander Mamut in 2011. “There’s no way in God’s world that anybody responsible would’ve let me do these things,” Daunt says of his early days at Waterstones. “They took somebody on a whim, because I had six bookstores, and I was coming and saying, ‘We can take over 320 stores with sales cratering and losing serious amounts of money.’” But it worked. Waterstones became profitable by emulating aspects of Daunt’s indie-store playbook, and in 2018 it was acquired by Elliott. As part of the deal, Daunt remained CEO of Waterstones and was then given another full-time job, leading Barnes & Noble, when Elliott bought it in 2019. (Daunt still owns his indie chain.)

Daunt’s arrival coincided with America’s waning reading habits. Last summer a study reported that from 2003 to 2023 daily reading for pleasure had fallen 40% in the US. Recent reports on schools reveal historically low reading scores, fewer cover-to-cover book assignments and shorter attention spans. If educators, pundits, social scientists and publishers are panicking, Daunt isn’t fazed. In December, days after a YouGov time-use survey found that 40% of Americans had copped to not reading a single book in 2025, Barnes & Noble announced plans to open an additional 60 stores in 2026.

Daunt refuses to believe that reading is on the decline. “It’s a lot of nonsense,” he says, noting other historical freakouts, like when the television was invented. “The energy in our stores is young adults, these 16- to 26-year-olds who pour into our stores and create bestsellers that just escalate.” For all the literary headwinds, there are plenty of tailwinds too. BookTok obsessives are turning old or undiscovered books into hits, while manga, romantasy and other genres have created booming literary franchises with rabid fandoms. Even indie bookstores are experiencing a resurgence, growing by 70% in the US over the last five years.

Onetime Barnes & Noble haters have put aside past grievances against the chain as a crusher of local bookstores to become boosters, arguing that its numerous, wide-ranging shelves keep publishers and the public invested in physical books and physical stores. That the company’s reversal is happening under the watch of private equity, an industry hardly known for letting retailers become more experimental and independent, is even stranger. (Elliott Advisors (UK) Ltd. declined to speak with Bloomberg Businessweek for this article.)

The chain now finds itself occupying a singular middle ground in the bookselling world, somewhere between David and Goliath, says industry observer and indie-bookstore advocate Maris Kreizman over email. “Amazon has changed the landscape of modern publishing forever and it’s so important that Barnes & Noble exists as an in-between space,” she writes, noting that the retailer’s turnaround has been positive for all booksellers. Remarking on the company’s contradictions, she adds that “they may have a CEO who actually reads books, which is a big deal in the book industry, but at the end of the day, they’re still a company owned by a hedge fund.”

That became all the more clear on May 18, when Daunt told NBC News that he would be comfortable with Barnes & Noble selling books written by AI. As new publishers sprout up using chatbots to replace authors and writers are being outed for using the technology, publishing is the next creative industry contending with tech replacing human talent. “As long as an AI-written book says it’s an AI-written book and doesn’t pretend to be something else and isn’t ripping off somebody else, as long as that’s clearly stated and the customer wants to buy it, then we will stock them,” Daunt told the Today show, acknowledging that it’s possible the chain may already be carrying books penned with help from AI. Predictably, Daunt’s comments did not go over well. “Barnes and Noble CEO saying the store will carry AI written books is a lot like Spotify pushing slop composed songs. These corporations hate artists,” wrote one author on X. “Great reminder to shop at your local independent bookstore or via http://bookshop.org,” posted another writer and book enthusiast with nearly 60,000 X followers.

In a statement to Businessweek, Daunt sought to clarify his remarks, explaining that the company currently doesn’t knowingly sell AI-written books or seek to sell them, but that it “would not ‘ban’ reputable books published by reputable publishers, even if AI generated, should these be published, labeled and there be clear evidence of customer demand.” Even so, he noted, “we think it very unlikely that there will be customer demand for AI generated books, or that reputable publishers will publish them.”

Daunt’s capitalistic impulses may have dinged his bookselling folk-hero status, but that could be because he has Wall Street on his mind. Although the chain doesn’t report its financials, sources within the company have speculated that Waterstones and Barnes & Noble generate about $3 billion a year in sales and $400 million in profits. The resurgence of both companies has Elliott preparing for a possible public offering in 2026 that would include the two booksellers and the stationery chain Paper Source, according to Reuters. Daunt, who has the unusual role of still also running Waterstones and his entirely separate indie book chain, says his formula to freely operate Barnes & Noble, while keeping his Wall Street bosses at bay, is simple. “If you’re delivering the money, they leave you alone,” he says. “If you don’t, they chop your head off.”

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