AP News, May 24th, 2007
Barnes & Noble Inc., the largest U.S. bookseller, said Thursday it lost money in its first quarter, hurt by increased discounts for its members. But strong sales of new releases pushed revenue upward.
The loss for the quarter ended May 5 totaled $1.6 million, or 3 cents per share, versus a profit of $10 million, or 14 cents per share, a year ago.
Excluding a 6-cent per share charge related to closing an Internet distribution center and 7 cents per share in expenses associated with a review of its stock-option practices, income was 10 cents per share.
Revenue rose 3 percent to $1.15 billion from $1.11 billion last year.
Analysts polled by Thomson Financial expected earnings of a penny per share on revenue of $1.14 billion. Analyst estimates typically exclude one-time items.
Sales in stores open at least one year grew 1.7 percent at Barnes & Noble. Sales rose 8 percent at BarnesandNoble.com.
Among the best-selling titles were Rhonda Byrne's "The Secret," Chris Bohjalian's "The Double Bind," Mohsin Hamid's "The Reluctant Fundamentalists," Giada de Laurentiis' "Everyday Pasta" and Mary Higgins Clark's "I Heard that Song Before."
The first quarter "had one of the better hardcover new release schedules in some time," Steve Riggio, chief executive officer, said in a statement.
But Riggio said that, as anticipated, gross margin declined in the quarter due to discounts given to customers who sign up as members.
Barnes & Noble, along with rival Borders Group Inc., are seeing the need to offer customers better deals _ even if it hurts profits in the short term _ as they face slower industry growth and fierce competition from discounters like Wal-Mart Stores Inc., that can afford to slash prices on books.
For the current quarter, same-store sales at Barnes & Noble stores are expected to increase in the low to mid-single digits, reflecting a boost from the July 21 release of J.K. Rowling's "Harry Potter and the Deathly Hallows."
The company also projects earnings in the range of 8 cents to 12 cents per share in the second quarter; analysts expect 13 cents per share.
For the full year, the company continues to expect earnings per share to be between $1.49 and $1.67 per share _ or $1.67 to $1.81 per share excluding charges relating to the shuttered distribution center and the stock-option review. Analysts expect $1.72 per share.
Shares of Barnes & Noble rose 80 cents, nearly 2 percent, to $42.82 Thursday.
