Barnes & Noble Reports Drop in 3Q Profit

Monday, November 15th 2004, 11:03 am

By: News On 6

NEW YORK (AP) _ Bookselling giant Barnes & Noble Inc. said Monday that third-quarter earnings fell 25 percent, dragged down by weak sales of books in its bestsellers category and missing Wall Street expectations. Its shares were down more than 3 percent in late morning trading.

The company earned $7.64 million, or 10 cents per share for the three months ended Oct. 30. That compared with $10.17 million, or 14 cents per share, in the year-ago period.

A survey of analysts polled by Thomson First Call expected 12 cents per share.

Total sales were $1.46 billion, compared with $1.27 billion a year ago.

Barnes & Noble store sales were $894.9 million for the quarter, up 4 percent. Sales at stores opened at least a year, known as same-store sales, were up 0.9 percent. The company owned nine new Barnes & Noble stores and closed three locations ending the quarter with 663 stores.

B. Dalton sales, which comprise 3 percent of total bookstore revenues, were $35.9 million of total bookstore sales, were $35.9 million for the quarter, down 19 percent from the year-ago period. The company closed seven stores ending the quarter with 176 stores. Third-quarter same-store sales declined 3.3 percent.

``We are encouraged that we were able to achieve our sales goal for the third quarter in light of the challenging sales comparisons from last year,'' said Steve Riggio, chief executive officer of Barnes & Noble in a statement. ``Sales of DVD, juvenile and cafe products were especially encouraging while sales of bestsellers were soft owing to the difficult comparisons against last year's strong sales of bestselling books.''

GameStop _ the nation's largest video-game and entertainment software specialty retailer that spun of officially from Barnes & Noble on Friday _ reported sales of $416.7 million for the quarter, an increase of 28 percent over the prior-year period. Third-quarter same-store sales increased 11.8 percent. Barnes & Noble's portion of GameStop's third-quarter earnings is based on a 59 percent ownership interest. Barnes & Noble's share of net earnings was $7.2 million, or 10 cents per share.

Barnes & Noble said Monday is the first day that Barnes & Noble and GameStop will trade only as separate public companies. Gamestop will be trading as GME.

Barnes & Noble also reaffirmed that fourth-quarter earnings will be between $1.51 and $1.56 per share in the fourth quarter. That's in line with the consensus from Thomson First Call, which estimates $1.55 per share for the period.

For the year, Barnes & Noble expects to earn $1.96 per share to $2.04 per share. Analysts project $2.03 per share.

Excluding GameStop, full-year earnings for the bookselling segment is expected to increase 30 percent, ranging from $1.78 to $1.84 per share, compared with $1.41 per share on a pro-forma basis.

For the nine months ended Oct. 30, the company earned $27.99 million, or 38 cents per share, compared with $7.43 million, or 10 cents per share, in the year-ago period. Total sales were $4.33 billion, up from $3.99 billion a year ago.