Sales Fall at B&N; Lowers Sales Outlook

Jim Milliot -- Publishers Weekly, 8/20/2008 3:23:00 PM

Total sales declined 1.6% at Barnes & Noble in the second quarter ended August 2, falling to $1.22 billion. Store sales were off 1.6%, to $1.1 billion, while sales through Barnes & Noble.com increased 3.6% to $99.8 million. Comparable store sales fell 4.7% at the physical stores in the period. The sales declines were expected since last July B&N posted record results because of the release of Harry Potter and the Deathly Hallows. However, B&N said that even excluding Hallows, comp sales were still down 1.5%. Furthermore, the nation’s largest bookseller said that given results in the first half and current trends, it was reducing its comparable sales outlook for the full year, lowering its prediction from slightly negative to a comp decrease in low single digits. Comp sales in the third quarter are expected to decline in the low single digits as well.

Results were better on the bottom-line. Although net income fell 14%, to $15.4 million, earnings were higher than expected. B&N attributed the improvement to improved gross margins which benefited from less discounting and tight management of operating expenses. The company said it still expects earnings to meet its earlier forecasts. For the first half of 2008, total sales dipped 0.3%, to $2.38 billion, while net income dropped 19.5%, to $13.2 million.

Looking into 2009, B&N said it has reduced the number of store openings it is planning to between 20 to 25. The company will open 30 to 35 stores this year, but said that cancellation of new malls by developers will mean fewer new stores next year.

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