Barnes & Noble Loss Widens

The bookseller loses $2.2 million after settling a tax dispute with the state of California.
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Barnes & Noble

(BKS) - Get Report

on Thursday reported a fiscal first-quarter loss of $2.2 million, or 4 cents a share, due in part to a charge to settle a tax dispute with the state of California.

The bookselling chain, which also recorded a $1.7 million loss in the year-ago quarter, cut its same-store sales outlook for the full fiscal year.

Thomson Reuters estimates called for a profit of 5 cents a share on net sales of $1.17 billion. In March, Barnes & Noble said it expected to report earnings of 5 to 10 cents a share this quarter.

Barnes & Noble saw net sales rise 1.1% to $1.16 billion, while same-store sales were down 1.5%.

The California settlement, which resulted in a $8.3 million, or 9 cent-a-share charge, stemmed from a dispute regarding the collection of sales and use taxes on sales made by Barnes & Noble.com from 1999 to 2005.

In 2005, a California appeals court ruled

that

Borders'

(BGP)

Web site and retail stores required separate tax treatment. Barnes & Noble is reportedly attempting to acquire its rival Borders.

Based on lower-than-expected first-quarter sales and the "overall retail sales environment," Barnes & Noble cut its full-year comparable-store sales guidance from "slightly positive" to "slightly negative." Also, second-quarter comparable store sales are expected to decrease in the low- to mid-single digits because the company doesn't have a bestseller like it did last summer in

Harry Potter and the Deathly Hallows

.

The company expects full-year EPS to range from $1.70 to $1.90. Second-quarter EPS is expected to be in a range of 8 cents to 13 cents.

Shares of Barnes & Noble were recently down 12 cents to $29.83 a share. Borders was trading up 19 cents to $7.10 a share.

This article was written by a staff member of TheStreet.com.