An upbeat group of executives greeted financial analysts last week in a conference call in conjunction with the release of Barnes & Noble's sales for the year ended February 2, 2002. Sales at the company's superstores rose 6.0%, to $3.4 billion, in the year, with comparable store sales up 2.7%. The increase in the superstore division more than offset a 16.6% decline at B. Dalton, where sales fell to $310.3 million. The drop in sales at Dalton was due to the closing of 35 stores in the year and a decline in same-store sales of 3.7%. Total sales for all bookstores rose about 3.5%, to $3.7 billion.
B&N confirmed earlier reports that fourth-quarter sales were better than expected (News, Jan. 14), and, as a result, the company is projecting earnings for this year to be higher than forecasted (earnings will be released March 21). Looking at the next fiscal year, B&N is projecting that comparable store sales at its superstores will rise 2% to 3% in the first six months and 4% to 5% in the second half of the year. Same-store sales at Dalton are projected to fall by 3% to 4% in the first half of the year and drop 4% to 5% in the second half. The company also plans to open 40 to 45 new superstores this year. With a bullish outlook for the superstores, B&N estimates that earnings per share for its retail operations (including GameStop) will increase by about 24% for the current year, while consolidated earnings will jump 46%, due mainly to a steep drop in the loss from BarnesandNoble.com. B&N chairman Len Riggio said the current plan is to keep BN.com a freestanding business.
The conference call also provided an opportunity for Steve Riggio, Mitchell Klipper and Alan Kahn to address investors in their new roles (News, Feb. 18). Riggio said he views his job as "nurturing the multichannel paradigm that we have built." Klipper said he will focus on driving the sales line and improving margins, which he said could hit 10% one day. Klipper also said the company believes it can open between 300 and 400 new superstores over the next five years.
Publishing Plans
Kahn noted that "Len and I are convinced that publishing is the next great frontier" for B&N. He said the company's publishing program will grow sales incrementally, rather than merely replacing sales. Areas that the company will initially focus on are children's and popular general-interest titles in hardcover and trade paperback formats, Kahn said. The company will also continue with its promotional and reprint business. Kahn said his first step in expanding the division is to develop relationships with authors and agents and to hire a staff.
Echoing Kahn's "great frontier" comments, Len Riggio said the publishing program will focus on bringing more properly priced and better packaged books to market. He said he hoped publishers will follow "the new paradigm" that B&N plans to bring to the publishing business. And while Riggio said he has "no plans at the moment to buy a publishing company, that doesn't preclude us from putting our money where our mouth is."
