Grim Quarter at B& Marked by 350 Layoffs
John Mutter -- 2/12/01
New loss far exceeds sales gains for the year

As expected, Barnes & Noble. com reported fourth-quarter losses that exceeded analysts' earlier expectations. Unexpectedly, however, the company laid off 350 employees, about 16% of its workforce, and will close a processing center in New Jersey and a book-fulfillment operation in Kentucky.

The layoffs will take place throughout the company, including at headquarters in New York City and headquarters in Santa Clara, Calif., as well as by "streamlining shifts" throughout the company's distribution network.

While sales rose 65% in the year ended December 31, to $320.1 million from $193.7 million, sales in the important fourth quarter rose at a lesser pace, 37.2%, to $104.6 million, from $76.2 million in the same period in 1999.

The net loss jumped dramatically. For the year, the net loss rose 169.3%, to $275.7 million, from $102.4 million. For the quarter, the net loss jumped 260.7%, to $138.1 million, from $38.4 million.

Like many money-losing companies, prefers to be judged by pro forma figures, which exclude writedowns, special charges and other items. In this case, the pro forma net loss for the year was $158.2 million, up 54.5% from $102.4 million in 1999. In the fourth quarter, the pro forma net loss was $54.2 million, up 41.1% from $38.4 million. predicted that net sales in the first quarter will be between $90 million and $100 million, with sales for the year between $420 million and $475 million, which would be about a 40% jump over 2000.

The company stated, too, that it will take a $75-million charge in the fourth quarter of 2000 relating to equity investments and a $5-million charge later this year to cover severance and closing costs.

CFO Marie Toulantis noted that the company has a strong balance sheet, with cash and marketable securities of more than $217 million and no debt. However, she continued, the company may have to "consider a financing in the first half of 2002," although management would want to defer any such financing "if possible."

In good news, boasted that it added one million new customers in the fourth quarter; achieved sales growth in 2000 with "reduced promotional discounting, minimal off-line advertising and more productive use of marketing dollars"; had an improved gross margin of 21.1% in the fourth quarter, compared to 14.1% in the same period a year earlier; and expects to reap benefits from "a number of one-time investments in distribution, technology and customer service" made during the year.