The news keeps getting worse for online retailers.
Barnes & Noble.com
Wednesday cut 350 jobs, or 16% of its workforce, and posted a wider-than-expected loss in the fourth quarter. The sobering news comes a week after the leading online merchant,
shed 15% of workers in its own round of layoffs.
"While we sincerely regret the impact of this consolidation in human terms, we believe the changes are necessary to improve every part of our operation," said Steve Riggio, vice chairman of Barnes & Noble.com, in a statement.
The news is likely to fuel the already intense speculation that the company's part parent, bricks-and-mortar bookseller
Barnes & Noble
, will take the company private. Barnes & Noble, which operates the site in a partnership with German media conglomerate
, has said in response to questions on the subject it would consider all options.
Barnes & Noble.com also gave guidance for the first quarter and full year 2001, putting its estimates in the general range of Wall Street expectations. The company predicted it would post a pro forma loss of 19 cents to 22 cents in the first quarter, slightly less than the 23-cent
First Call/Thomson Financial
consensus. For the full year, the company estimates it will lose between 75 cents and 85 cents a share. This compares with Wall Street expectations of a 75-cent loss.
For the fourth quarter, the company lost 37 cents a share, including costs associated with its acquisition of
, an Internet bookselling specialist. The consensus was for a 31-cent loss.
This wasn't unexpected, as Barnes & Noble.com told investors on Jan. 9 that it would post a larger-than-expected loss for fiscal 2000. The announcement marked the second time in three quarters the company said it would fall short of expectations, and prompted analyst downgrades, including a rare sell recommendation from
analyst Mark Rowen. In his report, Rowen wrote: "Due to the significant miss on financial targets in two of the last three quarters, we question whether management has a grasp on the drivers of the business." (Prudential has not done underwriting for the company.)
One for the Books
The woes that have plagued Barnes & Noble.com are similar to those that pummeled shares in other standalone Web retailers: Growth has been much slower than predicted. Outside of Amazon.com and online auctioneer
, no pure online retail companies attract the attention of investors anymore.
Instead, the online arms of bricks-and-mortar retailers have succeeded in taking market share from pure Internet firms. Now most analysts view Internet retailing as merely one channel for companies to sell their goods, along with actual stores and catalogs. Now, many analysts speculate that the company will be taken private and swallowed up by the bricks-and-mortar version.
Other high-profile casualties in the decline of online retailing are
, which said Monday it will be
out of business by April without a large cash infusion, and
, an online marketplace that recently announced it was shutting its doors.
Barnes & Noble.com shares gained 9 cents Wednesday to close at $2.13. Shares climbed above $25 just after the company went public in the summer of 1999, but never again topped that level.