Barnes & Noble Swings to Loss, But Beats Forecast

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Bookseller Barnes & Noble posted a net loss for Q1 on member discounts, but beat forecasts on a 3% rise in revenue. B&N shares gained 2% to close at $42.89 after the report. The company reported a Q1 net loss of $1.7 million (-$0.03/share) versus earnings of $10 million ($0.14) for the year-ago period. B&N had forecast a loss of -$0.08-0.12. Excluding charges related to the closing of the company's Internet distribution center and a review of its stock-option practices, B&N would have posted EPS of $0.10. Revenue was up 3% to $1.15 billion from $1.11 billion last year. Analysts were expecting EPS, excluding one-time items, of $0.01 on revenue of $1.14 billion. Q1 same-store sales were up 1.7%. Q2 same-store sales are projected to rise in the low- to mid-single digits, primarily because of the release on July 21 of "Harry Potter and the Deathly Hallows." Full-year same-store sales are forecast to be flat to slightly positive. B&N is forecasting Q2 EPS of $0.08-0.12 and full fiscal year EPS excluding items of $1.67-1.81; analysts are expecting $0.13 and $1.72, respectively. Q1's sales were boosted by "one of the better hardcover new release schedules in some time," according to CEO Steve Riggio, but member discounts cut into gross margin.

Sources: Barnes & Noble F1Q07 Earnings Call Transcript, AP, MarketWatch
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Stocks/ETFs to watch: Barnes & Noble Inc. (NYSE:BKS). Competitors: Inc. (NASDAQ:AMZN), Borders Group, Inc. (BGP), Books-A-Million Inc. (NASDAQ:BAMM). ETFs: Retail HOLDRS ETF (NYSEARCA:RTH), SPDR S&P Retail (NYSEARCA:XRT), PowerShares Dynamic Retail (NYSEARCA:PMR)

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