Chain Sales Rose 5% in Third Quarter, to $1.6 Billion

Total sales for the nation's three largest bookstore chains rose 5.2%, to $1.69 billion, for the third quarter ended November 2, 2002. The sales gain in the most recent period was higher than the 3.9% increase posted in the second quarter, and for the first nine months of the year, sales from Barnes & Noble, Borders Group and Books-A-Million increased 4.6%, to $5.15 billion.

B&N had the best quarter, with bookstore sales increasing 6.1%, to $839 million. Sales at its superstores rose 7.8% in the quarter, to $780.9 million, due to a combination of a 1.6% increase in same-store sales and the opening of 18 new outlets. Sales at Dalton fell 17.8%, to $51.9 million, as comparable-store sales dropped 6.5% and five stores were closed. Net income for the quarter was $4.7 million, down from $5.5 million in last year's third quarter.

B&N executives said they were pleased with results in the quarter despite slowing comparable-store sales that they attributed to slow store traffic. Sales of books were up, but executives said that sales in the chain's line extensions, such as gifts and the cafe, "hit a home run" in the quarter.

Total revenues at Borders rose 5%, to $749.8 million, and the net loss was cut to $1.8 million, compared to $3.1 million in last year's third quarter. Sales at Borders's superstores were up 6.5%, to $511.8 million, due to a combination of the opening of 15 outlets in the quarter plus a same-store sales increase of 0.6%. In superstores that were open for at least one year, Border reported that book sales were slightly positive; music was down in the low single digits; and sales of DVDs, gifts and accessories were strong.

At Waldenbooks, sales fell 5.3%, to $164.6 million. Comparable-store sales fell 2.3% in the quarter and five stores were closed. Sales in the international segment jumped 23.8%, to $73.4 million, helped in part by the opening of six superstores and one Books etc.

Borders's chief financial officer, Ed Wilhelm, said that during the quarter, sales in literature and fiction remained strong and sales of diet and health books picked up. The children's category, which has been a steady performer all year, also had a strong third quarter. Computer book sales continued to be soft, and sales in the history and religion categories were off, which Wilhelm attributed to strong sales in those segments last year of titles related to the September 11 attacks.

Books-A-Million had a weak third quarter, with sales down and losses up. Total revenue for the company dipped 0.6%, to $97.2 million, while the net loss increased to $2.4 million from $1.9 million in last year's third quarter. Comparable-store sales were down 2.6%.

Book sales were a somewhat bright spot, with comparable-store sales ahead 1.6%. Offsetting gains in book sales were softer-than-expected results in nonbook categories, particularly gifts and magazines. Company chairman Clyde Anderson said he was "disappointed" in the third-quarter results, although he said he was pleased with the performance of the book segment. The chain's two largest sections, fiction and children's, posted solid gains in the quarter, with fiction sales led by sales of new books by Tom Clancy, Stephen King and Nicholas Sparks.

Quarterly Bookstore Chain Sales ($ in millions)