B&N Sales Sink; Sees Gloomy Holiday

by Jim Milliot -- Publishers Weekly, 11/20/2008 6:19:00 AM

The news was about as bad as it could be from Barnes & Noble. For the third quarter ended November 1, total sales fell 4.4%, to $1.1 billion, with sales through its bookstores down by the same 4.4%. Same store sales fell 7.4%. Sales at Barnes & Noble.com rose 2%, to $109 million.   Moreover, the nation’s largest bookstore chain predicted that--based on the negative sales trend to date--same store sales in the fourth quarter will fall 6% to 9%. Earlier this month, B&N chairman Len Riggio warned employees in a memo that the company was bracing for a terrible holiday season.

Company CEO Steve Riggio blamed the poor performance on a “significant” drop off in customer traffic and consumer spending. CFO Joseph Lombardi said comps were down throughout the quarter and the negative trend has continued into November. Riggio said the company will not increase the discounts on titles in order to protect its gross margins. Riggio also said the retailer has aggressively managed its expenses, and is “taking measures to reduce expenses for the balance of this year and next.” He also pointed to a strong balance sheet, helped in part by a reduction in inventory. The company will open 15 new stores in 2009, including nine outlets that will be relocated. B&N usually opens at least 35 stores anually and had previously said it planned to open 20 to 25 stores next year. In addition, B&N has several hundred leases coming up for renewal over the next few years and executives believe they have a good opportunity to negotiate lower rents.

Through the first nine months of 2008, same store sales were down 4.6% and B&N expects full year comps to fall 5% to 6%. Total revenue for the company at the end of the nine months slipped 1.7%, to $3.50 billion, and the company had a net loss of $5.2 million compared to earnings of $20.7 million in the same period in 2007.