Books-A-Million (Nasdaq: BAMM) reported earnings for its first quarter yesterday. How exciting was this story, you ask? From a top-line perspective, not very. And comps made for another downer of a chapter.
Net sales for the quarter increased a measly 2% to $116.3 million. That won't make anyone want to turn the page, but maybe this will -- net earnings per share, on a diluted basis, rose 44% to $0.13.
Still, there are those same-store sales, which essentially remained flat with a slight decline of 0.5%. This comes right on the heels of a comps contraction in the previous quarter.
Books-A-Million is in a cutthroat business, especially considering that retail giants such as Barnes & Noble (NYSE: BKS) -- which reported its own results last week -- and Borders (NYSE: BGP) wield enormous clout in the bricks-and-mortar bookselling world. And then, of course, we have the significant brand power of online juggernaut Amazon (Nasdaq: AMZN), which sells books and a whole lot of other things as well.
A look at the most recent 10-K shows that net earnings have been on the rise over the past few years. Net cash from operations, however, has been on a downtrend. Here's another plot complication -- the dividend yield on Books-A-Million's stock is actually quite good at 2.2% when compared with the yields on the other booksellers.
So while the bottom line looked good and the yield seems attractive, I have to agree with my colleague Timothy Otte and his assessment of the company. I just can't get behind this situation, even given the positives. What I'd like to see from Books-A-Million is a solid rise in same-store sales -- that would raise my interest in the company, as would a better trend in terms of cash flow.
I imagine that there will be, as the earnings release mentioned, some positive short-term effect from the new Harry Potter book, which is due to be released in July. If Books-A-Million can leverage the wizard's last adventure to full advantage, then perhaps it will see better top-line returns during the year. But I'm not really sure what long-term effect it will have, or whether it will all turn out to be just a flash in the pan. For now, I'm closing the cover on this book and moving on.
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Fool contributor Steven Mallas owns none of the companies mentioned. As of this writing, he was ranked 3,155 out of 29,438 rated investors in Motley Fool CAPS. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.
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