A leaner staff and significant reductions in operating expenses were the main factors driving down Barnes & Noble.com's operating loss in 2002, the company reported in its year-end filing with the Securities and Exchange Commission. Earlier this year, B&N.com reported a 4.5% revenue gain, to $422.8 million, and a net loss of $73.7 million, down from $244.4 million (News, Feb. 3).

During 2002, B&N.com cut 173 full-time and part-time positions, and had 990 employees as of February 28, 2003. The company's marketing, sales and editorial costs fell by 42%, as the e-tailer focused on more targeted marketing programs and also negotiated more favorable online marketing deals. The consolidation of Fatbrain's operation with that of B&N.com helped to reduce fulfillment and customer-service costs by 20% in the year. The elimination of expenses associated with operating the Fatbrain Web site was a major reason behind the 21% decline in technology and development expenses last year. In its filing, the company said it expects expenses in all major areas to continue to fall as a percentage of sales in 2003.

In brief remarks about the sales increase last year, the e-tailer said an increase in its customer base, to 13.6 million from 11.2 million, helped lift sales. International sales fell in the year, dropping to $17 million from $21 million. The increase in sales and reduction in expenses will give B&N.com enough funds to operate for at least 12 months. The strong cash position means that neither of B&N's two major shareholders, Barnes & Noble and Bertelsmann, will need to provide an infusion of cash this year. Under its plan to acquire more of B&N.com's stock, B&N's stake in the e-tailer rose to 38%, while Bertelsmann's stake was 36.9%.