Both Borders Group and Barnes & Noble announced last week that the combination of the September 11 terrorist attacks and the U.S. retaliatory strikes that began October 7 will result in lower than expected sales and earnings for the third quarter.

Borders said it expects its loss in the current period to be four cents per share, compared to its original estimate of a loss of one cent per share; in last year's third quarter, Borders lost six cents. Comparable-store sales at the company's superstores are now projected to be flat to down 1% in the quarter, compared to an earlier forecast of a 3% gain. Same-store sales at Waldenbooks are seen falling 5%, compared to previous predictions of a 1% to 2% decline.

Borders president Greg Josefowicz noted that, while sales had begun to recover from the plunge they took immediately after September 11, the start of the bombing campaign resulted in another "significant sales dip." Josefowicz said that Borders remains hopeful about a successful fourth quarter, but advised that "current conditions make a forecast for the holiday period difficult."

At Barnes & Noble, third-quarter earnings for its bookselling segment are expected to be four cents to five cents below previous estimates, although earnings for the entire company are forecast to remain unchanged, as sales in its video game segment are expected to be above plan. B&N had previously estimated that bookselling earnings per share would be about 23 cents, but now expects earnings to come in at 18 cents to 19 cents per share.

The lowered forecast is due in part to a 1.1% decline in comparable-superstore sales for September. For the first two months of the current quarter, same-store sales were up 0.6%, compared to the first two months of fiscal 2001. Same-store sales at B. Dalton were down 4.4% in the quarter to date. Based on current trends, B&N is predicting that comparable-superstore sales will finish the quarter even with, or up to 1% ahead of, last year's third period. B&N had been looking for a 2% to 3% increase in comparable-superstore sales.

The company did not change its earnings forecast for the fourth quarter, noting that while it is somewhat disappointed by current trends, some optimism remains.