Barnes & Noble Warns About Earnings

Tuesday, January 9th 2001, 12:00 am

By: News On 6

NEW YORK (AP) â€” Shares of Barnes & Noble Inc. fell 8.3 percent Tuesday, after the nation's largest book seller warned that fourth-quarter profits would be lower than Wall Street estimates due to disappointing holiday sales.

The company said its book selling segment will earn $1.30 per share, compared to the Wall Street consensus of $1.46. The company's video game business is expected to earn 6 cents per share for the quarter, well below the 33 cents estimated by analysts surveyed by First Call/Thomson Financial.

Results for the period ending Feb. 3 will be released Feb. 22.

Shares were down $2.06 to $22.81 on the New York Stock Exchange in midday trading.

Barnes & Noble's warning comes on the heels of a similar announcement last week by rival Borders Group Inc. and Amazon.com's announcement Monday that fourth-quarter sales came in at the low end of its goals and slightly below what analysts expected. Amazon's profit margins also were a bit below what analysts anticipated.

Borders, the second largest book chain in the U.S., said Friday that it would miss Wall Street's expectations due to weak holiday sales and the costs of increased promotions. It also said it plans to sell its underperforming toy store unit called All Wound Up.

At Barnes & Noble, sales at its ``super'' stores open at least a year, known as same-store sales, were up 1.3 percent from Oct. 29 to Dec. 30, 2000. Same-store sales figures are considered the best indicator of a retailer's strength. At the company's B. Dalton division, same-store sales declined 3.3 percent for the period. At its electronics division, Babbage's, same-store sales plummeted 12.5 percent.

Barnes & Noble chairman and chief executive Leonard Riggio blamed the disappointing holiday sales mostly on the ``election fiasco.''

It ``seemed to be a significant cause of the shortfall, since sales dropped dramatically the day after the election and remained soft until the issue was resolved,'' he said.

Riggio had expected some weakness in sales at Babbage's due to the product shortage of Sony's PlayStation 2 units, but noted in a release that he did not anticipate shipments to be reduced to the levels experienced. ``Nor did we expect consumers to reject the other products in the pipeline owing to their insistence on waiting for the newer platforms to arrive,'' he said. ``We left millions of customers unsatisfied in their quest to upgrade.''

Riggio said the competition between Nintendo and Sony games platforms, as well as Microsoft's launch of Xbox, should help boost sales this year.