Tuesday, June 29, 2010

B&N store sales and stock price continue to decline, but overall sales are up

Barnes & Noble's  fiscal fourth-quarter loss widened despite stronger-than-expected sales, as the world's biggest bricks-and-mortar bookseller gave a weak outlook.

It forecast a first-quarter loss of 85 cents to $1.15 a share, worse than the 44-cent loss forecast by analysts. It sees same-store sales flat to up 3%.

For the just-begun year, the company predicted the bottom line could range from a 10-cent loss to a 30-cent profit excluding revenue deferrals. That compares with analysts' estimate for an 80-cent profit. B& N also said revenue would increase 20% to 25% -- analysts' revenue expectation assumes 16% growth -- with same-store sales also seen flat to up 3%.

The company heralded 2010 as the year it would transform into a major e-commerce retailer, after its results slumped through the economic downturn as shoppers migrated to discount and online booksellers. Indeed, in its sales projections Monday, the company said online comparable sales would jump 75% to $1 billion.

Its push to shift to digital sales has been vigorous. In March, the company named its online guru, William Lynch, as its new chief executive. In May, it began selling used CDs and DVDs online. And a week ago, B&N unveiled a scaled-down version of its Nook e-reader and cut the price of its premium Nook to match Amazon's Kindle. The Nook also competes with Apple's iPad and other e-readers and tablet computers.

But it continues to struggle with weak store traffic, with same-store sales down 3.1% in the most recent period. Online sales -- a small portion of revenue -- surged 51% to $141 million. Comparable sales at the company's college booksellers rose a better-than-expected 2.9%.

For the quarter ended May 1, Barnes & Noble posted a loss of $32 million, or 58 cents a share, from $2.7 million, or 5 cents a share, a year earlier. The latest results included a 25 cent benefit from tax reserves and a 7-cent boost from a favorable inventory shortage rate. Excluding them, loss widened to 89 cents.

In February, the company forecast loss of 85 cents to $1.15 a share, worse than analysts' estimates at the time. Gross margin fell to 27.5% from 30%. The stock has fallen 14% since the beginning of the year, worse than the market at large.  (info from Dow Jones)

1 comment:

  1. B&N Chief Executive William Lynch said today that Barnes & Noble expects to have about 25% of the digital book market by 2013, providing the bookseller with the opportunity to boost revenue by $3 billion to $5 billion

    I wonder how exactly the CEO came up with the estimate of e-books sales between $3 billion and $5 billion by 2013 - if we take into account their estimated market share (25%), it means that we talk about a $16 billion e-book market in 2013 (in average).

    Given that the total books market generates $20 billion in sales and that the estimated market share of e-books, which is currently around 5%, is expected to be around 25% in a couple of years, I believe Lynch's $3-$5 billion sales estimate is very far from being realistic.

    If I was an investor, I would ask to see the excel sheet he's using to get these figures..