Revenues in's books/music/video division fell 12.1% in the third quarter ended September 30, 2001, to $351.4 million, although the group's pro forma operating income increased 6%, to $26.2 million., the nation's second largest book e-retailer, reported that third quarter sales rose 6.5% to $96.8 million, while its net loss fell from $56.5 million to $38.3million.

Amazon executives said the sales decline was due in part to its decision in the quarter to offer a 30% discount on all books priced at more than $20. Company chairman Jeff Bezos said Amazon's long-term goal continues to be to lower prices as much as possible. He said the price change "is an investment in the long-term growth in absolute dollar profitability of our books division." Amazon chief financial officer Warren Jenson said another reason for the sales drop was that the "bulk" of the estimated $25 million to $35 million in revenues that the company lost due to the terrorist attacks came from the BMV group.

Jenson said Amazon is committed to growing sales in the BMV unit next year by such measures as lowering prices to drive volume; adding new customer service features such as its new "Look Inside!" function; and developing more service agreements, like the one it has with Borders to run that company's e-commerce program. Revenues in the BMV group hit $511 million in last year's fourth quarter, but have fallen in each period in fiscal 2002; sales in the second quarter were $390 million.

Bezos and Jenson remain excited about the prospects for Amazon's used item initiatives. In the quarter, purchases of used products accounted for 17% of all U.S. orders. Jenson said it was "hard to tell" if used book sales were cannibalizing sales of new books. The profit motive for selling used items is clear--for every dollar of used revenue, 85 cents fall directly to the bottom line.

According to Jenson, the company remains confident that it will fulfill its promise to achieve pro forma operating profit in the fourth quarter, despite lowering its sales growth forecast from 10%-20% to flat to 10%. Jenson said Amazon had issued the lower revenues projections because of the weak economy, although he noted that sales over the last 30 days were higher than sales in the 30 days prior to September 11.

For the first nine months of the year, pro forma operating income in the BMV division jumped 187% to $92.8 million, despite a 3% sales decline to $1.15 billion.

At B&, the sales gain was led by a 19% increase at the e-tailer's flagship store,, while sales were soft at The sales increase, coupled with a 24% decline in operating expenses, resulted in an operating loss of $39.6 million in the quarter, down from a loss of $61 million in last year's third quarter.

Although sales were at the low end of B&'s estimate of $95 million to $105 million, company vice-chairman Steve Riggio said he was "extremely pleased" with results, given the weak retail environment, which was exacerbated by the events of September 11. B& president Maria Toulantis said the company continues "to drive toward real bottom-line profitability, as measured by generally accepted accounting principles, as quickly as possible."

The company said it expects fourth-quarter sales to be $110 million-$135 million. For the full year, B& has lowered its sales forecast of $420 million-$475 million to $400 million-$425 million.

For the first nine months of the year, sales were up 11%, to $289.5 million, and the net loss was cut to $116.5 million from $171.2 million.