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Barnes & Noble Inc (BKS)
Barnes & Nobles Posts a Loss but Boosts Outlook
The largest U.S. bookstore chain, Barnes & Nobles reported less than stellar quarterly earnings today. Continual weak consumer spending led to a first-quarter loss. The New York-based book giant lost $2.7 million, or 5 cents per share, for the quarter ended May 2. That compares to a loss of $2.2 million, or 4 cents per share, a year earlier. Revenue fell 4% to $1.11 billion, while same-store sales sank 5.7%. How did these figures compare to analysts expectations? What can we expect from Barnes & Nobles for the rest of 2009?
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| Stock Analysis |
Barnes & Nobles' earnings report easily beat expectations. Analysts were projecting a loss of 15 cents, on average which was far greater than the 5 cent loss reported. Revenue also fell less than analysts' projections. Sales fell 4.4% to $1.11 billion as sales at stores open at least one year fell 5.7%, slightly better than the company's forecast for a same-store sales drop of 6% to 9%.
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Barnes & Nobles has cut costs and eliminated jobs since the recession began. To save money, Barnes & Noble said it would freeze its top executives' salaries at 2008 levels in March. It cut 100 headquarters jobs earlier this year. It also bought e-book retailer Fictionwise, to capture some of the growing market for electronic books. But the company has still struggled as shoppers tighten their wallets buying fewer books and music, and increasingly shop online. Amazon (AMZN: Charts, News, Offers) has emerged as a major competitor and has survived better in the downturn as it offers a lower-price alternative. As the U.S. recession entered its second year, Barnes & Noble addressed declines in sales and store traffic by improving the efficiency of its distribution system and scaling back discounts. Best-selling book titles during the quarter included Spencer Quinn's "Dog on It," Sandra Dallas' "Prayers for Sale," and Malcolm Gladwell's "Outliers."
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Despite losses and weakness in the overall economy, it isn't all doom and gloom for the book giant. Barnes & Noble boosted its full-year profit projection to $1.10 to $1.40 a share from a previous range of 95 cents to $1.25. The company forecasted that second-quarter profit will total as much as 15 cents a share. This sent shares soaring over 7% at the open, the biggest intraday jump since March 19. Another sign the stock is doing well is that the company also announced a quarterly cash dividend of 25 cents per share, payable on June 30 for stockholders of record at the close of business on June 9. As of 12:15 pm shares are up around 2%.
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