Both Amazon.com and Barnes & Noble.com reported higher book sales for the second quarter ended June 30.
Revenues in Amazon.com's books/music/video division rose 6%, to $411 million, for the second quarter ended June 30. The increase was driven by a 20% increase in unit book sales, which Amazon chairman Jeff Bezos attributed to deeper discounts and more favorable free shipping terms. "Lower pricing is working," Bezos declared in a conference call, adding that sales for the entire company have "reaccelerated" and that margins have increased. Total company revenues rose 21% in the quarter, to $806 million.
Amazon now gives a 30% discount on books priced over $15 and is offering free shipping on all orders over $49. Bezos said he believes that the $15 price point "is about the right level" at which to provide a discount. He said that Amazon may drop the discount price point slightly, but "it will never go to zero." Bezos also noted that the "resurgence in book sales" helped to offset weak music sales. For the first six months of the year, sales in the books/ music/video division increased 7%, to $854.7 million.
The sale of used products continued to grow in the quarter and accounted for 20% of North American unit sales, representing 35% of North American orders. Bezos said the sale of used items is an important part of Amazon's strategy and that he expects the used business to continue to grow in coming quarters. "We're striving for unit growth" and don't particularly care if the units sold are new or used, Bezos said. Amazon is looking to generate minimum unit growth rates for its different divisions and will use price as a lever to achieve those goals, Bezos explained.
Bezos was optimistic about prospects for the second half of 2002. Although Amazon offered no predictions for books/music/ video, the e-tailer projected that sales for the entire company will grow by more than 18% for the full year, higher than the earlier prediction of a 15% increase.
Sales up 2% at B&N.com
Total revenues at Barnes & Noble.com rose 2.6%, to $85.8 million, for the second quarter, slightly higher than the $80 million to $85 million sales forecast. The e-tailer cut its net loss to $20.6 million from $38.4 million in the comparable period in 2001.
The sales gain was led by the company's consumer segment, which had a 25.3% increase in the quarter, offsetting a decline in sales to corporate customers. The reduction in losses was attributable to a 31.9% drop in operating expenses as B&N. com cut spending in all major areas. The largest decrease was in marketing, sales and editorial costs, which were cut by 47.6%, to $7.8 million. Spending on technology and Web site development fell 14.8%, to $9.3 million, and general and administrative costs were down 13.5%, to $6.4 million. Company CEO Marie Toulantis said she was pleased with results.
The company expects sales in the third quarter to be between $100 million and $110 million, with a net loss of 12 cents to 14 cents per share, compared to a loss of 24 cents per share in last year's third quarter. The company is still projecting full-year sales to be in the $400 million to $450 million range, with a net loss of 51 cents to 53 cents per share.
Sales for the first six months of the year fell slightly, to $192.4 million, from $192.8 million in the first half of 2001, and the losss was cut to $41.1 million from $78.2 million.
