Chains' Sales Rose 2.7% in Third Quarter

Total revenues of the nation's three major bookstore chains—Barnes & Noble, Borders Group and Books-A-Million—increased 2.7%, to $1.60 billion, for the third quarter ended October 31, 2001. The gain was the smallest in the current fiscal year, following increases of 5.7% in the first quarter and 6.1% in the second.

BAM, which had the largest increase in the quarter, at 8.5%, benefited from the inclusion of 18 Crown Books stores the company bought earlier in the year. The retailer also opened up three superstores in the quarter while closing one, giving BAM 157 superstores at the end of the quarter. Its roster also includes 51 Bookland stores and six Joe Muggs Newsstands. BAM chairman Clyde Anderson said the company's new prototype superstores are larger than its old ones and reflect BAM's commitment to focus on books. The company has eliminated such sidelines as music and card departments from some outlets in order to increase the number of book titles it carries. Anderson added that since the Crown purchase gave BAM access to the Chicago and Washington, D.C., markets, new store openings are planned for other large markets.

B&N's 2.9% sales gain in the quarter at its bookstores was led by a 5% increase in superstore sales to $724.6 million. Total sales for all of B&N rose 4.6% to $995.6 million, a figure that includes an 8.6% increase, to $199.0 million, from its GameStop subsidiary. (Due to market conditions, B&N has postponed the planned autumn IPO for GameStop until next year.) The net loss of $6.8 million for the company reflects $6.1 million in earnings from its retail operations offset in part by a $11.2-million loss from its stake in Barnes & Noble.com.

During the quarter, sales through mall stores, including B. Dalton stores and Barnes & Noble superstores located in malls, were particularly weak. "People stopped going to the malls" after September 11, company chairman Len Riggio said. Riggio said he was particularly concerned about the "fizzle" in superstores opened for little more than one year. Although the group performed relatively well, sales did not meet projections. The inability of authors to get on television due to the coverage of the war on terrorism hurt sales across the board, Riggio said, and shrinkage was higher than expected.

Borders's 1.8% sales increase in the quarter was the result of gains in its superstore and international segments, offset in part by lower Waldenbooks and online sales. The net loss from continuing operations was $3.1 million, compared to $2.6 million in last year's third quarter. During the quarter, the company added 13 superstores and closed one, giving the retailer 374 superstores. It also opened seven Walden outlets, while closing six, leaving 856 stores. The company, which opened 30 domestic superstores this year, said no more new stores are planned for the remainder of the fiscal year ending January 31, 2002, although it plans to open as many as 50 superstores—domestic and international—next year. No new Walden openings are scheduled. Executives said they will renew as many Walden leases as they consider appropriate as part of the companywide cost-reduction program. The company renewed 70 Walden leases in the third quarter, many at lower rents. Between 125 and 150 leases are up for renewal next year.

For the nine-month period, sales for the three chains were up 4.9%, to $4.92 billion.

Quarterly Bookstore Chain Sales
($ in millions)