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Barnes & Noble.com's Q3 Sales Up 6.5%; Operating Loss Declines 35% to $40 Million

25 Oct, 2001 By: Hive News


Barnes & Noble.com announced Thursday that for the third quarter ended Sept. 30, 2001 consolidated sales for the Barnes & Noble.com web site and the fatbrain.com web site were $96.8 million, an increase of 6.5% from sales of $90.9 million for the third quarter of 2000.

Sales from the Barnes & Noble.com web site generated strong gains in the quarter, increasing 19% year over year. For the nine months ended Sept. 30, 2001 consolidated sales were $289.6 million, an 11% increase over the comparable prior year period, according to a company press release.

The operating loss for the quarter declined 35% to $39.6 million from $61 million in the third quarter of 2000. On a GAAP basis the net loss for the quarter was substantially reduced to $38.3 million, or $0.24 per share, from $56.5 million, or $0.36 per share, in the prior year, the company said.

The pro forma net loss for the third quarter was $30.9 million, or $0.19 per share, a 30% improvement from a pro forma net loss of $44.2 million, or $0.28 per share, in the third quarter of 2000. This compares to analysts' consensus estimates for a pro forma loss per share of $0.20. Pro forma net loss excludes equity in losses in equity method investees and amortization of goodwill.

Barnes & Noble.com continues improving gross profit and reducing operating expenses, the company said.

On the third-quarter sales increase of 6.5%, gross profit improved 12% to $21.2 million. Marketing expenses substantially declined in the quarter to $10.9 million or 11.3% of sales, down from $18.1 million or 20% of sales for the third quarter of 2000. Fulfillment and customer service expenses also decreased significantly to 9.8% of sales, compared with 16.3% of sales for the third quarter of 2000. Total operating expenses were $60.8 million, a 24% decline from third quarter 2000. All operating expenses decreased substantially as a percent of sales from the second quarter of 2001.

As of Sept. 30, 2001, the company had $125.5 million of cash and marketable securities, and no debt.

The company acquired more than 765,000 new customers during the third quarter, bringing the cumulative customer count to more than 10.3 million, the company claimed. The cost of customer acquisition in the third quarter declined dramatically to $14 from $24 in the third quarter of 2000.

All previously discussed comparisons to 2000 include results for Fatbrain.com which was acquired in November 2000.

"We are extremely pleased with our third quarter results," said Steve Riggio, vice chairman of Barnes & Noble.com.

"Our sales growth far outpaced that of the retail sector and our competitors, demonstrating an acceleration of the market share gains we have experienced over the last several quarters. The sales gains were achieved despite the difficult third quarter retail environment that was obviously exacerbated by the events on Sept. 11. In addition, our Barnes & Noble.com web site sales increase of 19% is even more impressive given the tough third quarter 2000 comparisons which included the Harry Potter release. This quarter's results provide strong evidence that consumers recognize that," Riggio said.

"The third quarter results are an indication of our ongoing commitment to reduce operating expenses and improve productivity across all areas of the company," said Marie Toulantis, president and c.o.o. "We are pleased with our results and our goal remains to drive toward real bottom-line profitability, as measured by generally accepted accounting principles, as quickly as possible."

In guidance for the remainder of 2001, the company says that net sales are expected to range from $110 million to $135 million resulting in a pro forma loss per share of $0.19 to $0.21. This compares with fourth quarter 2000 results of $114 million in sales and a pro forma loss per share of $0.37.

Guidance for the full year is expected to be sales in the range of $400 million to $425 million and a pro forma loss per share in the range of $0.80 to $0.82, according to a company press release.

Barnes & Noble.com offers a range of books and related information products, and has added DVD and video.


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