At the company's annual meeting in New York City last week, Barnes & Noble vice-chairman and CEO Steve Riggio reiterated the company's view that there are opportunities to open another 500 stores in the U.S. Some 250 sites are currently "under review." He said that each new store is "unique and custom-built for the community" and that managers order some 20% of books for each store.

Asked about market saturation, chairman Len Riggio said the company's experience is that "the more bookstores expand, the more books are sold." The company has had only 20 superstores fail since the retailer began rolling out its superstore model 10 years ago. As an example, he pointed to the area around the company's original store on lower Fifth Avenue in New York City. When B&N opened a superstore on Sixth Avenue, "a nine iron away," sales at the main store "did not suffer much." When the company opened yet another branch at nearby Union Square, sales at the other two stores also "did not suffer much." He added that B&N has yet to enter "many markets."

In the immediate future at least, the company doesn't plan to expand internationally, Len Riggio said, commenting that it is "very complicated to go overseas," in part because B&N would have to adapt to different publishers, languages and distribution systems. The company's GameStop division, specializing in video games, may expand internationally, "probably in the Americas." Len Riggio said that the company doesn't plan to integrate video games into bookstores because, at this point, the product is incompatible with the bookstores' product mix. In the next few years, however, "the likes of Microsoft will expand all sorts of options in information and entertainment," which may result in opportunities to sell such products in the bookstores.

By contrast, B&N and Barnes & will continue to integrate operations more and more. Riggio said that while "it's possible and not completely out of the question," that B& will be merged back into B&N, he said "we don't have any plans." In fact, he noted that the spinoff was an excellent move for the company: "the balance sheet would be a disaster right now if we hadn't done the IPO."

Weak Comps

Comparable-store sales for B&N's superstores were flat in May following "unusually" strong sales in May 2001, when sales were up 6.2%. Same-store sales at Dalton fell 3.8% in the month. Among the new top sellers for the company were A New Kind of Science, In This Mountain, The Wailing Wind, About a Boy, The Right Words at the Right Time and Profiles in Courage for Our Time.