Barnes & Noble Posts $2.7M 1Q Loss As Sales Drop
The Associated Press
05/21/09 - 08:51 AM EDT
SARAH SKIDMORE
PORTLAND, Ore. (AP) Barnes & Noble Inc. reported Thursday that it lost $2.7 million in the first quarter as its sales continued a multi-quarter slide, but the results beat Wall Street expectations and the bookseller raised its profit forecast for the year.
Sales have been slipping away from the nation's largest bookstore chain for some time as shoppers turn to online and discount booksellers. The recession has compounded the problem, with consumers severely limiting spending on discretionary items like books and music.
New York-based Barnes & Noble's $2.7 million loss for the quarter that ended May 2 amounts to 5 cents per share, compared with a loss of $2.2 million, or 4 cents per share, a year earlier.
Excluding the impact of discontinued operations, the company lost 4 cents per share, better than the loss of 15 cents per share analysts expected.
The bookseller's revenue fell 4 percent to $1.11 billion, also better than analysts' forecast, of $1.08 billion.
Online sales dropped 7 percent and comparable-store sales fell 5.7 percent, slightly better than the 6 percent to 9 percent drop the company anticipated but still tracking the negative revenue trend.
Investors welcomed the better-than-expected report, sending shares up 71 cents, or nearly 3 percent, to close at $24.60 Thursday.
Barnes & Noble's management said improved customer service, better use of promotions and operational improvements boosted the quarter's results, and they said strong book titles and its entrance into the electronic book format should help future results.
The company is focused on its recent acquisition of Fictionwise and its entry into a larger e-book market, said CEO Steve Riggio. And it is "well aware of the many players that exist in, as well as, are about to enter this arena," he said.
The digital market represents a growth opportunity for the company and will be "far larger" than the sum of the e-book versions of in-print books it currently has, he said.
"The greater amount of content is exciting to us and has inspired to us develop unique approaches to the user experience of buying and reading books," he said.
Details are to be announced as the new products launch this year.
Barnes & Noble plans to stay focused on operational improvements and close 15 stores by the end of the year.
Frost & Sullivan analyst Aravindh Vanchesan said the company seems to recognize the changing nature of its consumer in that it is updating its online business and putting emphasizing e-books to better compete with companies like Amazon.
But he said the company will face tight margins for some time because consumer spending is unlikely to improve soon. Rather than invest in attempts to meet the scale and efficiency of Amazon, Vanchesan said, Barnes & Noble might do best to maintain low losses and hang on to its existing customer base.
"They just have to ride this period out," he said.
Barnes & Noble said the first quarter was good enough that it is raising its full-year profit estimate to a range of $1.10 to $1.40 a share, from 95 cents to $1.25 per share. Analysts expect a full-year profit of $1.07 per share.
The company also said it expects comparable-store sales to decline 3 percent to 5 percent for the year, better than the previous forecast of a 4 percent to 6 percent annual drop.
