Barnes & Noble Earns a Measly $80 Million in Three Months

Somebody's making money selling books.....


DOW JONES NEWSWIRES -- Barnes & Noble Inc.'s (BKS) fiscal third-quarter earnings dropped 0.9% amid the company's recent acquisition of its leader's college-bookstore business. 

But shares dropped 4.7% to $20.50 premarket as same-store sales declined more than forecast and Barnes & Noble said same-store sales will fall 3% to 5% this year, not 2% to 4% as previously expected. 

It also forecast a fourth-quarter loss of 85 cents to $1.15 a share, worse than the 61-cent loss forecast by Thomson Reuters-polled analysts. Same-store sales are seen down 2% to 4%. 

Nonetheless, Chief Executive Steve Riggio also said Barnes & Noble was "thrilled" with how customers have embraced its e-reader, the nook. "In addition to the accelerating online sales trends, nook sales have been strong at our bookstores since the product became available earlier this month," he added. 

The world's biggest brick-and-mortar bookseller has continued to struggle with weak store traffic amid the recession and sales that have been hurt even more by a movement of shoppers toward online and discount booksellers. In January, the company said it saw lower-than-expected holiday sales. 

For the quarter ended Jan. 30, Barnes & Noble reported a profit of $80.4 million, or $1.38 a share, down from $81.2 million, or $1.42, a year earlier. The company in January cut its forecast to between $1.20 and $1.40 a share. 

Sales jumped 33% to $2.17 billion on the recent acquisition of the college business as same-store sales decreased 5.5%. Analysts had forecast $2.16 billion in revenue, and the company had expected same-store sales to decline 1% to 3%. 

Gross margin fell to 28.3% from 32%. 

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.co

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My worry is based in the probably faulty premise that ebook sales are going to really take off over the next few years, leaving print books living in the same dusty attics as vinyl records, 8-track tapes and now CDs. ebooks are now something like 5% of the market (I think I read that number on the intertubes, so it must be true), but what if, in five years, say, that number goes much higher? To 20%, say, or 30%? How will that affect brick and mortar booksellers? I'm guessing it won't be pretty, unless you're strongly niched in some way, or selling mostly used books to old fossils like me. The ebook trend represents a huge potential transfer of power, but there's really no way of knowing how it'll all shake out. So, I worry.
I think the worry is well-founded. There are three stores near me owned by old hippies selling vinyl records (and all of them are old records) and I think it's entirely possible that's what will happen to bookstores.

Especially if college students get trained to read everything on some kind of iPad or other device and that's probably already happened. All those BitTorrent books are read on computers, no one's printing them out.

I think there are some profound changes happening to the way we own things. If the subscription model works in schools the publishers and service providors will look to extend it. So, for a "low, low monthly fee" (maybe even included in your cable TV or phone bill) you'll have access to every book in the world. A great deal until you miss a monthly payment.

On the other hand, if you could read as many books as you want for thirty bucks a month ("Just a dollar a day!") it would be pretty tempting.
A lot of independent stores have closed. A lot more will follow suit. That will leave B&N, Borders, and the big box stores. Do we really want our future in their hands? Is there any doubt in anyone's mind that they will care only about profit? Predictably, the literary offerings will dwindle to a few names and titles, all of which will have deals in the seven figures with their publishers.

Therefore, for midlist authors, the e-book revolution and the growth of Amazon offer the only hope.
I don't have a problem with corporations making money. If they don't make money, they go away, and we need them for stuff.

But...

It used to be they went after sustainable growth, and, while competition might be ruthless, customers were at least allowed to believe the company wanted to make a profit by selling them something they needed or wanted. Now most companies think no farther than the upcoming quarter, profit growth must be in double digits, and they no longer hide the fact that the only reason they provide goods a services is because they're not allowed to just send representatives out to beat us and take out money.

And they're working on that.

If corporations are now allowed to contribute to political campaigns directly and without limit as though the were real people (and not "legal fictions") then I don't think it's asking too much for them to show a little social responsibility as well.
I worry about the future. I like actual bookstores. Call me old-fashioned.
This is the kind of think that torqued me off when publishers (and everyone else) started laying people off at the end of 2008. It wasn't that many of these companies weren't making money; they weren't making as much money as they wanted to.

I get a kick out of the mantra "servicing our shareholders." Depending on how a 401(k) is structured, the company may just have laid off a nice chunk of its shareholders. (For those outside the US, a 401(k) is a retirement savings plan.)
These numbers don't suggest B&N is doing well. Even if profit is higher than expected, share price is a better indication of health.
Not according to my mentor, Warren Buffet. Share prices often reflect a lot of emotion.
Emotions change stocks one day at a time. When you're talking about an entire quarter, there's more at play than what traders are feeling.
They need to give Borders some tips.

Best Wishes!

http://www.stacy-deanne.net

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