Surely, you've spent some quality time with yourself, sipping coffee in the café attached to the nearest Borders
Last week, both book retailers reported second-quarter results. Borders, which operates its namesake stores as well as Waldenbooks, reported earnings of $0.04 per share, up from essentially breakeven a year ago. Barnes & Noble reported earnings of $0.02 a share from its various bookstores -- Barnes & Noble, B. Dalton, and Scribner's, among others -- and its stakes in barnesandnoble.com
Let's take a look at the quarterly numbers of the companies, side by side:
BordersBarnes & Noble Market cap $1.50 bil $1.60 bil Sales $763.60 mil $1.16 bil Earnings $3.40 mil $1.40 mil Comps -1.0% 0.3% P/E 13.8 24.9 1-yr. return -20% -45%
What do these numbers tell us? First of all, they show that, although Barnes & Noble has 35% more sales than Borders, the company hasn't been able to convert that to more profits. This is due to the losses Barnes & Noble has taken from its investments in such enterprises as iUniverse.com, Book magazine, enews inc., and Indigo Books and Music.
Borders sticks to books and music and has kept costs low. It even relies on help from Amazon.com for online sales. On the other hand, barenesandnoble.com is losing money.
Despite the better performance of Borders, the market still gives Barnes & Noble a higher earnings multiple. Does the potential of GameStop (which experienced 32% year-over-year sales growth), barnesandnoble.com, and its stable of bookstores warrant the premium? Interested investors should turn a few more pages to find out.