PW: B&N.com Says Sales Will Hit $335 Million

May 08, 2000

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B&N.com Says Sales Will Hit $335 Million
-- 5/8/00

In a conference call with analysts discussing Barnes&Noble.com's first-quarter results, company chief financial officer Marie Toulantis said the e-retailer was comfortable with analysts' projections that sales in 2000 will be in the $335 million-$360 million range. Toulantis also estimated that B&N.com will become "cash-flow positive" by the fourth quarter of 2001 or the first quarter of 2002.

Sales at B&N.com jumped 142% to $78.2 million for the first quarter ended March 31, 2000, outpacing the growth of its net loss, which increased 119% to $44.2 million. The e-retailer's gross margin fell to 19.4% in the most recent quarter, from 22.6% in last year's first period, due to higher than expected sales of music, which have lower margins than book sales. Toulantis said books still accounted for more than 85% of the company's sales in the quarter. Operating expenses as a percentage of total revenues fell in the period, with the most notable decline coming in marketing and sales, which was 41.1% of sales in the first quarter of 2000 compared to 58.5% last year. B&N.com spent $32.2 million on sales and marketing in the quarter, up from $18.9 million last year. Technology and Web site development expenses rose to $6.4 million from $3.5 million, although technology spending was 8.1% of sales in this year's first quarter compared to 10.9% in the same period in 1999.

During the quarter, B&N. com added more than 850,000 customers, bringing its total customer count to nearly five million. Repeat customer orders were 68.1% in the period, up from 56% a year ago. Vice-chairman Steve Riggio said the company is "in excellent position to build our e-commerce capability on every front." The company will open its new video store in June, and the e-book superstore that B&N.com is developing in cooperation with Microsoft should be up by the third quarter. Riggio is extremely excited about the long-term prospects for e-books, predicting that they will help turn the site into a portal that will offer a wide array of content. Riggio noted that B&N.com plans to add new book products and other information categories to its site: "Twelve months from now, B&N.com will look very different than it d s today, although it will fit like a glove." Another initiative set to begin this year is the e-retailer's print on-demand service, which Riggio said will start operations this summer.
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A version of this article appeared in the 05/08/2000 issue of Publishers Weekly under the headline: