Borders Group Inc. and Barnes & Noble Inc. appear to be getting more aggressive in offering discounts, contrary to what the book retailers have intimated, a JPMorgan analyst said Thursday.
Charles Grom said the ongoing discounts shouldn't come as a surprise, however, since "it's a tough time to be a bookseller." The analyst, who maintains a scorecard of coupons he receives, said traffic at the stores remains slow.
In May, New York-based Barnes & Noble lowered its sales outlook for the year, as results are expected to decline from 2007, which benefited from the final "Harry Potter" book.
Borders Group, meanwhile, said earlier this month it is cutting nearly 275 corporate jobs in order to reduce annual expenses by $120 million. The Ann Arbor, Mich., company has also put itself on the block.
"Looking ahead, however, we think that the summer months will be the true test of implementing a less-promotional strategy as the temporary bump from tax rebates ends in mid-July," Grom wrote.
The analyst backed his "Underweight" rating on Barnes & Noble and "Neutral" rating on Borders.
Border Group shares lost 11 cents to $7 in afternoon trading, while Barnes & Noble shares rose 41 cents to $26.91.
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